Corn futures rose on strong US exports on Thursday, while the short-covering rally in wheat continues, but the threat of Argentine reforms still looms over soybean markets.
Wheat prices have already shrugged off an upgrade to world stocks by the US Department of Agriculture on Wednesday, and on Thursday they overcame some disappointing export sales data.
Weekly US export sales data showed corn sales smashing expectations, at 1.10m tonnes, where markets had expected 450,000-650,000 tonnes.
And Terry Reilly, of Futures International, reported that Indonesia may import 3m tonnes of corn in 2016 to meet growing demand.
March corn was up 1.3% at $3.78 ¾ a bushel in late deals.
Weak sales
US export sales of wheat came below the low end of expectations, at 225,100 tonnes in the last week.
Sales are down 43% from last week, and 45% below the four week average, and the third lowest so far this season.
Some 14.7m tonnes have been cleared for export so far this marketing year, down 15% from 17.375m tonnes this time last year.
Joe Lardy of CHS Hedging called the sales “terrible”.
French exports
And there were weak exports from the European Union as well, which granted export licences for 563,000 tonnes of soft wheat this week.
This is down from the season high of 1m tonnes awarded last week, leaving the volume cleared since the start of the 2015-16 season down 22% compared the same period last year.
Even after a 1m-tonne downward revision to EU wheat exports in Wednesday’s Wasde, this still leaves real exports well behind the pace needed to meet the USDA figure.
Profit taking
But there was a touch of export demand, as 500,000 tonnes of wheat are reported to have been bought in an Algerian wheat tender.
The results of tenders by the Algerian state buyer are not made public, but French exporters usually dominate, because of the low cost of shipping compared to other wheat origins.
And markets rose, as the short covering rally continued. Richard Feltes, of RJ O’Brien, reported “wheat bottom pickers taking profits today”.
March Chicago wheat was down 1.0% at $4.94 ¾ a bushel in late deals.
March Paris wheat was up 0.3% at E177.50 a tonne in late deals.
Strong sales
Soybean sales were strong, at 1.4535m tonnes, where markets were expecting 700,000 to 1.1m tonnes.
But the threat of Argentine sales weighed on prices, as Mauricio Macri took over as president.
Mr Macri has pledged a number of reforms which are likely to encourage exports, and could see Argentina’s sizable soybean stocks pushed onto global markets.
Argentine question
A 5 percentage point cut to soybean export tariffs has already been announced, and markets are now waiting to see how soon, and how large, a devaluation to the peso is on its way.
“The prospects of Argentina’s currency being devalued, perhaps as soon as early next week, is offering resistance,” said Brien Henry, of Benson Quinn Commodities.
And Mr Feltes pointed to discussion around a possible devaluation of the Chinese renminbi, which would be bad for demand from the world’s top soybean exporter.
January soybeans were up 0.3% in late deals, at $8.79 ¼ a bushel.
Fund liquidation in sugar
Raw sugar tumbled on a rash of chart based selling, breaking through the 50 day moving average for the first time since September.
This week’s CFTC showed managed money very long on sugar, leaving plenty of room for fund liquidation.
And weaker Brazilian real weighed prices as well, encouraging selling from the world’s biggest producer.
March raw sugar settled down 3.6% at 14.55 cents a pound in New York.
Coffee edges down, cotton tumbles
And for coffee there was the added pressure of welcome rain in key growing areas of Brazil.
March arabica coffee futures settled down 0.4%, at 126.35 a pound in New York.
January robusta coffee settled down 0.26%, at $1,522 a tonne in London.
Cotton sales weakened, with net upland cotton sales for this crop year at 78,700 running bales, down 73% from the previous week and 64% from the prior 4-week average.
March ICE cotton was down 1.7% at 63.73 cents a pound.
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