Oil prices rallied on Tuesday, from a seven-year low on Monday, but failed to buoy grain futures, as markets keep a wary eye on Argentine prospects and US interest rates.
January Brent crude futures were up 2.5% in late deals.
“The turnaround in the energy sector has been supportive,” said Darrell Holaday, of Country Futures.
But markets are broadly still holding tight for Wednesday’s announcement from the US Federal Reserve, which is expected to deliver an increase in interest rates for the first time since 2006.
Any surprises in the announcement, or comments by Federal Reserve chairman Janet Yellen, could have a strong bearing on the strength of the dollar, driving the dollar-denominated prices of commodities one way or another.
The dollar was up 0.6% against a basket of world currencies at time of writing.
Spate of tenders
Wheat futures staged a rally for much of the session, but trimmed gains, as threat of a resurgent dollar loomed.
There was support from a spate of tenders.
Syria issued an international tender to buy 200,000 tonnes of milling wheat, while Tunisian tendered for 100,000 tonnes.
Japan bid for 123,275 tonnes of wheat in its latest tender, while Jordon postponed its deadline for offers on a 100,000 tonne tender.
The South African crop estimate committee trimmed its forecast for 2015 wheat production by 0.3% to 1.501m tonnes, citing the continued drought in Free State Province.
March Chicago wheat was up 0.2% in late deals, at $4.94 Ѕ a bushel.
The US oilseed body Nopa released some weaker than expected data on the speed of soybean processing.
Nopa’s members crushed 156.134m bushels of soybeans in November, down from 158.895m bushels in October, the smallest November crush in four years.
Markets had expected volumes to rise, with an average prediction of 161.6m tonnes.
And soyoil stocks as of the end of November were reported at 1.477bn pounds, were analysts had forecast stocks at 1.450bn pounds.
Stocks were up from 1.408bn pounds month-on-month, but still behind the 1.005bn pounds reported a year ago.
January soyoil prices fell 1.4% to 271.7 cents a pound in late deals.
And markets are still eying the prospect of increased exports from Argentina, where farmers are sitting on a large backlog of soybean stocks.
The new Argentine regime has already cut export tariffs, and a widely expected currency devaluation could add more impetus.
“The market is still focused on changes in the Argentine export landscape and coming currency devaluations that may come into play,” said CHS Hedging.
In Brazil, the pace of soybean planting is still lagging, despite some better weather in Mato Grosso.
Planting is estimated at 93% complete, behind the five-year average of 98%.
January soybean futures were down 0.7% in late deals, at $8.67 ѕ a bushel.
Race for dirt
Argentine concerns are focused around soybeans for now, but the end of export tariffs for corn is encouraging farmers to increase plantings, at the cost of the oilseed.
Richard Feltes, of RJ O’Brien, reports that the broker’s Argentina crop scout pegged corn/bean production at 27m tones/60m tonnes, where the US Department of Agriculture had forecast 25.6m tonnes and 57.0m tonnes respectively.
“Acreage is expected to rise for corn this year, and export offerings of both corn and wheat have gotten more competitive in recent tenders,” noted Tregg Cronin, of Halo Commodities.
Meanwhile, the dry weather in South Africa is threatening corn prospects in Free State and Northwest Province as well.
“Showers are expected to be very limited this week, which will maintain severe dryness in western areas and allow dryness to increase again elsewhere across the Corn Belt”, said Kyle Tapley, of MDA Weather Services.
Ethanol loses out
The US Environmental Protection Agency reported that the use ofethanol in road fuel has fallen.
The volume of ethanol blending credits, which are generated when fuel suppliers mix ethanol into gasoline before sale, fell to 1.23bn credits in November, from 1.27bn in October.
In the US fuel ethanol is primarily produced from corn.
February ethanol prices were down 0.8% in late deals, at $1.455 a gallon.
March corn was down 0.5% in late deals, at $3.77 a bushel.
Sugar prices rallied, on ideas of a global deficit, as well as the stronger oil price.
Sugar is exposed to oil markets, as a large volume of the Brazilian sugar crop goes to fuel ethanol production.
Analyst Platts Kingsman hiked its estimate of the global sugar deficit, the extent to which demand outstrips supply, by 1.37m tonnes, to 7.8m tonnes.
March raw sugar in New York settled up 0.6%, at 14.59 cents a pound.
Coffee goes sideays
Arabica coffee futures were unchanged, as much-needed wet weather in key Brazilian growing areas kept a lid on gains.
March arabica coffee futures in New York went sideways, to settle at 119.90 cents a pound.
Exports from Vietnam, the top robusta grower, were up 8% month-on-month in November, in line with markets expectation, albeit slightly behind government forecasts.
January robusta settled up 0.3%, at $1,480 a tonne in London.
(Source – http://www.agrimoney.com/marketreport/pm-markets-yellen-and-argentina-keep-lid-on-grain-markets–3424.html)