Morning markets: wheat futures revive as importers stir Have - TopicsExpress



          

Morning markets: wheat futures revive as importers stir Have wheat prices fallen to a level which can spur demand? There was some hope, after Egypts Gasc grain authority late on Tuesday joined something of a shopping spree for the grain, announcing its first tender since the October 9-10 event at which it bought nothing, saying prices were too high. (Wheat prices have fallen in Chicago, the world benchmark market, by some 4% since then.) Gascs last purchase was made on September 10, from Romania, Russia and Ukraine, which have dominated orders so far in 2013-14. Bargain for those specs With Jordan also tendering for 100,000 tonnes of wheat, Iran in talks to buy 300,000 tonnes, and Saudi Arabia and Taiwan buying a combined 812,000 tonnes on Monday, the week has given support to ideas that end users see value at current levels. At Commonwealth Bank of Australia, Luke Mathews said: The worlds major importers appear to be showing more interest given prices have retreated, hitting a six-week low in Chicago in the last session. Benson Quinn Commodities Brian Henry said: Recent weakness has attracted demand with the recent Saudi tender, Iraq snooping and a Jordanian tender. Analysis of the Saudi tender indicates a bargain for those specifications, ie for harder wheat, at $317-332 a tonne including shipping. A bargain at least by US pricing standards, as Agimoney signalled at the time. Sowings progress As to who will win the Gasc tender, with the result to be announced later today, Mr Henry noted that offers of US soft red winter wheat, the type traded in Chicago arent too far from being competitive with Black Sea values as exporters in both locations work to get ownership. Not that all the news on wheat is bullish, with Russian farmers catching up on autumn grain sowings, thanks to a dry and warm spell, following an unusually cold one which had provoked thoughts of the prevention of 3m hectares of sowings. In fact, farmers have completed 87% of intended plantings, reaching 14.2m hectares, compared with 15.6m hectares a year ago. Meanwhile, in the US sound planting progress and improving crop conditions means the winter wheat crop will enter dormancy favourably rated, Mr Mathews said. Raise some quality fears Still, rains in eastern Australia looked a mixed blessing, indeed refreshing areas which need precipitation, but potentially coming too late in the development of wheat to rescue yields. The moisture will be generally too late for winter crops, Mr Mathews said, if boosting prospects for summer grains, such as in-vogue sorghum, being seeded. Indeed, the rainfall will temporarily delay harvesting activities and could raise some quality fears, and local wheat basis levels are likely to remain firm as a result. In Sydney, east coast wheat for January eased, but by a modest Aus$0.50 to Aus$282.00 a tonne. Chicago wheat for December added 0.4% to $6.58 ¾ a bushel as of 09:30 UK time (03:30 Chicago time). Short covering rally ahead? With Friday to provide the US Department of Agricultures first Wasde report in two month, a much-anticipated event, Benson Quinn Commodities Brian Henry cautioned over the potential for gains in corn too, as investors take profits on short positions. Given the oversold nature of the wheat and corn markets, I would be careful of brief short covering rally in both markets ahead of the report, he said. However, investors remained reluctant to buy into corn given the prospect on Friday of the USDA lifting above 14.0bn bushels its estimate for the US harvest of the grain, and above 2.0bn bushels its forecast for domestic stocks at the close of 2013-14, representing a near-tripling over the season. And those strong yield estimates keep coming in. Indeed, Linn Group raised the bar on expectations for the US corn yield to 163.3 bushels per acre, well above the USDAs current 155.3 bushels per acre and the consensus guess for the Wasde of 158.9 bushels per acre. Demand factors Thinking of huge supply continued to overshadow signs of demand. We continue to unearth export demand, CHS Hedging said, noting the announcement on Tuesday of 286,000 tonnes of US corn to South Korea and unknown, and firm basis at US Gulf ports. And there has been considerable comment on improved profitability for corn ethanol plants, with Cargill bringing onstream the Fort Dodge plant in Iowa it bought rom Tate & Lyle, consuming 150,000 tonnes of corn a day, and Noble Group announcing the restart of its South Bend, Indiana site which is only a little bit smaller. Ethanol plants are coming back online due to an improvement in profit margins. We may see increasing demand for corn to be made into ethanol, Vanessa Tan at Phillip Futures said. Certainly it has taken some of the sting out of the prospect of an announcement that the US is to reduce its ethanol mandate. Still, corn for December was 0.1% lower at $4.24 ½ a bushel. Soy nudges higher Soybeans sided with wheat in posting gains, if only small ones, reaping support from demand ideas. Indeed, while the Wasde is expected to lift the estimate for US soybean production, it may also lift the consumption forecast for 2013-14 too thanks to a strong start to the season for exports. Analyst estimates for year-end stocks in the Wasde range from a comfortable 240m bushels to a tight 145m bushels. Soybeans for January added 0.1% to $12.51 a bushel. Elsewhere in the oilseeds complex, palm oils rally continued to stall, appearing to tally with ideas from Standard Chartered that it had gone far enough for now, with profit-taking inspiring a 0.4% drop to 2,569 ringgit a tonne in Kuala Lumpur futures. The vegetable oil faces its own trial by data on Monday, when the Malaysian Palm Oil Boards releases monthly production, export and stocks statistics. Finding a base Among soft commodities, serial losers arabica coffee and cotton showed signs of finding some backbone after declines to lowest in nearly five years, and nine months, respectively. Arabica coffee added 0.2% to 103.70 cents a pound in New York for December delivery, amid continued talk of heavy rains affecting the harvest in Vietnam, the top producer of robusta coffee. Still, robusta coffee for January eased 0.3% to $1,472 a tonne in London. Cotton for December gained 1.0% to 76.66 cents a pound – looking for its first positive close in 14 sessions. The mid-session reversal on Tuesday is perhaps a tentative sign that the market is finding a base, CBAs Luke Mathews said.
Posted on: Thu, 07 Nov 2013 09:45:41 +0000

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