Malaysian exports of the vegetable oil dropped 10.1% month on month, according to cargo surveyor Intertek Testing Services.
If that was weak, what was especially disappointing was that exports for most of November had been showing an increase.
As of November 20, volumes were showing a 4.3% increase compared with those for the first 20 days of October.
Sure, November has one less day than October, meaning that even a level pace of shipments will result in a weaker month-on-month figure.
But not to the extent of 10.1%, and the impact on futures was to send Kuala Lumpur’s benchmark February contract down 0.6% to 2,347 ringgit a tonne as of 09:15 UK time (03:15 Chicago time).
The contract had risen by 3.8% over the previous three sessions, helped by somewhat bullish talk from a much-watched Indonesian conference, with one influential analyst, Dorab Mistry, for instance cutting to 1m tonnes his forecast for growth next year in world production, which will hit 63m tonnes.
Previously, he had forecast growth at 1.5m tonnes, and initially at 2.5m tonnes, before factoring in bigger losses to El Nino-inspired dryness.
James said that export prices, currently at a little over $500 a tonne, could hit $650-675 a tonne by mind-2016 as Indonesia uses more of the vegetable oil for making biodiesel, and putting a price of $800 a tonne on the cards if El Nino-inspired damage proves severe.
In Chicago, however, markets had a generally slightly firmer tone – albeit potentially only thanks to a bit of end-of-month tidying up by funds.
Month ends by tradition have been associated with fund portfolio clear-outs, which have typically seen prices fall.
However, hedge funds have also historically been far more bullish on ags than now, holding a net long of just 8,242 lots in the top 13 US-traded ones according to latest data, down from 350,000 as of mid-October.
(Fresh weekly data will be out later on Monday, delayed from Friday because of the Thanksgiving holiday.) So position closing this time could have a less negative hue on prices.
‘Taxes will be eliminated’
On the fundamental side, one big worry for US crop traders, of Argentina coming back into export markets in earnest, remains, with a little more clarity at the weekend over what is planned by Mauricio Macri after he takes over as president on December 10.
According to Ricardo Buryaile, Argentina’s designated farm minister, the new government will abolish export taxes on corn and wheat the day after it assumes office, and cut the export tax on soybeans by 5 percentage points, to 30%.
“The wheat and corn taxes will be eliminated from the first day, in line with what we promised,” Mr Buryaile said, according to a report in Clarin.
On soybeans, “we are examining which methodology we will use” to implement the cut in the export levy, he added.
Still, the market has seen this coming.
And not all the political news emanating from South America is quite so favourable for supplies, with analyst Michael Cordonnier, for instance, highlighting a 43% cut to R$400m in Brazil’s funding for crop insurance in 2015.
In 2016, it will, at R$425m-455m, fall well short of 2016 levels.
Dr Cordonnier, the respected analyst, also flagged the boost to transport costs from new tolls, with transport costs from the key soybean producing state of Mato Grosso to the port of Santos now at $315 a tonne, equivalent to about $2.30 a bushel.
This in turn affects the competitiveness of Brazilian exports, or at least prompts price reductions for Brazilian growers, in turn a disincentive for production.
Soybeans for January stood flat at $8.73 a bushel in Chicago, while corn for March added 0.1% t0 $3.67 ¾ a bushel.
Wheat fared worse, however, dropping 0.6% to $4.76 ¼ a bushel in Chicago for March delivery, taking it perilously close to a contract low of $4.72 a bushel reached in September, and still feeling some hangover from somewhat disappointing US weekly export sales data on Friday.
These showed volumes of 303,700 tonnes, a drop of 58% week on week.
“US traders managed to export modest volumes last week but had done much better the previous week,” said Tobin Gorey at Commonwealth Bank of Australia.
South Africa corn
Still, Kansas City-traded hard red winter wheat fared better, adding 0.5% to $4.69 a bushel for March delivery, and continuing to reduce its unusual premium to Chicago soft red winter wheat to some $0.07 a bushel, from more than $0.26 earlier in the month, March basis.
Besides the idea that a discount of higher protein wheat to lower protein wheat is unsustainable, hard wheat also got a help from a drier forecast for the central Plains, a key growing area, albeit after some weekend moisture to help newly-seeded crop.
Staying on the weather, in South Africa, where drought is depressing corn production prospects for a second successive season, “rains this week may lead to minor improvements”, weather service MDA said.
Still, corn prices keep rising in the country, with yellow maize for December up 2.3% at 3,435 rand per tonne, earlier hitting 3,450 rand per tonne, the highest for a spot contract since March last year.
White maize for December was up 2.3% at 3,445 rand per tonne, below a high earlier of 3,469 rand per tonne which was also last seen in March last year.
News source: agrimoney