by Agrimoney.com
Has
China bought corn? Or will harvest
pressure come to bear on Chicago futures? Did Washington's announcement of a
poultry trade battle against Beijing put Chinese buyers off?
"Not
sure where this may lead, but we don't need to start a trade war with those
folks," Mike Mawdsley at Market 1 said.
Corn
futures, as in the last session, edged higher in opening deals only to fade,
even by 07:40 GMT (08:40 UK time) as traders awaited answers.
"The
market will be watching closely to see if the [US Department of Agriculture's]
daily reporting system ends up releasing any US corn sales as we progress
through the balance of the week," Jon Michalscheck at Benson Quinn Commodities
said.
'$7-a-bushel magnet'
An
early rise was in line with the broader market mood, with Tokyo shares closing up 0.2%, Seoul stocks up
0.9% and Shanghai shares trading up 2.7% in late deals, amid hopes for further
progress in settling the eurozone debt crisis, although with the prospect of a
conclusion to the US Federal Reserve's monthly monetary policy meeting injecting
a note of caution.
The dollar and Brent crude were little-changed.
And
for corn, there was an upward pull from the options market.
"October serial options will expire on Friday and that could be
providing a magnet towards the $7.00-a-bushel level on the December contract,"
Mr Michalscheck said.
"The
$7.00 strike price on the puts happens to have the largest amount of open
interest going into today's session at 14,579 contracts and it also happens to
be at the 50% level of the 108,945 total October puts that were still open as of
today."
In
short, all else being equal, the vote from options markets looks to be
$7-a-bushel corn.
'US origin
competitive'
A
purchase by South Korea's largest feedmaker, Nonghyup feed, of 85,000 tonnes of
corn, besides, 20,000 tonnes of soymeal, was also viewed positively.
"US
origin was competitive. This was seen as a test for the competitiveness of US
corn into Asian markets and indicates that the export demand destruction story
from higher prices is not yet occurring," Paul Deane at Australia & New
Zealand Bank said.
Furthermore, as a small insight into China's corn dynamics, customs
data showed the country importing 244,500 tonnes of the grain last month, up
from 172,600 tonnes in July.
Still,
as Mr Mawdsley noted, "with harvest at our doorstep, it isn't the time of year
to mount a big rally". The spike in supplies produced by harvests tend to press
on crop prices.
There
was enough uncertainty around to drag Chicago's December corn contract down 0.2%
to $6.89 a bushel.
'Potentially massive wheat for corn
substitution'
That
put a dampener on other crops too, with Chicago wheat for December losing early gains
to show a loss of 0.25 cents, at $6.74 ¼ a bushel, amid further mixed thoughts
on prospects for sowing the southern US hard red winter wheat crop.
"The
decent rains that fell in the eastern region of the hard red winter wheat area
will allow for more planting progress this week, but many of the western areas
will remain bone dry," Benson Quinn's Brian Henry said.
"However, the $8.62-a-bushel hard red winter wheat insurance price
will entice producers to plant wheat, if at all possible."
Luke
Mathews at Commonwealth Bank of Australia noted "reports of potentially massive
wheat for corn substitution in China", encouraged by price
differentials.
China's
appetite
Soybeans maintained,
just, a grip on positive ground, adding 1.5 cents to $13.39 ½ a bushel for
November delivery, amid hopes for Chinese demand (chicken dispute or
not).
Such
hopes were whetted by Tuesday's announcement of China's purchase of 120,000
tonnes of US soybeans.
That
said the Chinese customs data showed a slip in the country's imports of the
oilseed last month, to 4.51m tonnes, from 5.35m tonnes in July, although it was
South American supplies which took the hit, with trade from the US still low
ahead of harvest.
Adding
some support to sentiment was the first positive close on Tuesday in seven
sessions by fellow oilseed canola in
Canada, adding Can$7 to Can$555.60 a tonne for November delivery.
In favour,
or not
In
Kuala Lumpur, palm oil felt the heat
from the China data, which showed imports slipping to 511,800 tonnes last month,
from 595,000 tonnes in July (albeit remaining higher year on year), with
Malaysia bearing the brunt of the slowdown.
Palm
oil for December slipped 0.3% to 3,059 ringgit a tonne.
However, for cotton,
the data showed imports rising above 207,000 tonnes, up 50,000 tonnes from
July.
December cotton added 0.6% to 106.30 cents a pound in New York, for
December delivery.
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