Thursday, February 9, 2017

Ag Futures Listless Ahead Of Today's Big USDA Data Dump (the real action is in Chinese chili peppers)

Last Chg
Corn 369-4-1-2
Soybeans 1053-0-5-6
Wheat 430-4-2-0

From Agrimoney:

AM markets: corn recoils from 6-month top ahead of data slew

Corn futures, having on Tuesday in Chicago closed above their 200-day moving average for the first time since June, set another landmark in the last session, in achieving their highest finish since July.

Whether Thursday provides a third successive momentous session… well that may well depend on that the US Department of Agriculture reveals in its monthly Wasde crop report on world supply and demand, although other countries are having a big say in price discovery too.
Brazil's Conab also later releases official data, on domestic crop supply and demand.
And China, which is proving a bit of a market focus at the moment, has already issued its monthly crop report, the Casde, which did provide a bit of interest for corn watchers, in cutting the estimate for the domestic supply surplus in 2016-17 by 700,000 tonnes to 4.41m tonnes.
The downgrade to the supply figure, which came in at 33.73m tonnes last season, reflected a higher estimate for consumption, besides a 200,000-tonne cut to the import forecast, which look less appealing thanks to the weaker domestic values encouraged by the scrapping of a guaranteed price regime.
China is attempting to sell down huge state stocks built up as a result of offering farmers set values which were typically well above market rates.
Price moves
On China's Dalian exchange, best-traded corn futures for May closed at 1,608 yuan a tonne, their highest finish in nearly eight months, and in decent trading volumes....MORE

FT Alphaville's David Keohane shares this link in today's Further Reading post: 
After garlic crush, China farmers singed by red-hot chili market
Chinese farmer Gao Ge was worried. The 27-year-old from Shandong province had chosen not to sell his freshly picked chili pepper crop after prices soared by almost a third in just two weeks in November, hoping for even higher prices.

Speculators were scooping up tonnes of the spicy fruit, betting on tight supplies as hot temperatures and heavy rain damaged the nation's crop, cutting it by 10 percent.

Last year, the same investors played a similar game in garlic, sending prices to stratospheric levels.
But now, prices have slipped as fears about low supplies have ebbed, Gao hasn't sold a single pepper, and the two-tonne crop sitting at his small farm is losing its color - and its value.

In late January, Gao was scrambling to sell his harvest in Jinxiang, one of the country's main chili trading hubs, to fund his family of five's week-long Lunar New Year holiday.

"I'm a bit panicked," he said by phone just days before festivities started on Jan. 28.
"We have been toiling for the whole year and now we want to sell our stock and celebrate the new year."

Keeping prices and food supplies stable is a priority for Beijing, as the government seeks to ensure staples for its growing urban population and maintain the health of farming, one of the biggest sectors in the world's No. 2 economy.

So while chili prices are still at historically high levels, the role of speculative investors in roiling the market and the difficulty some small farmers are having in selling their products have raised concerns. The government has already cracked down in other red-hot markets including equities and property....MORE