Twitter @ edwhitemarkets
Anyone thinking agricultural fundamentals have regained supremacy in crop futures pricing got an ugly slap to the head on the first Monday of 2015, with crashing crude oil prices seeming to drive commodity fund money into grain futures.
While WTI crude fell to less than $50 per barrel during the session, soybeans shot up 37 cents per bushel, with other agricultural commodity futures rising closely behind.
The strength in crop futures, with little fundamental news to back the increase, was due to “flow of investment funds out of the energy sector,” said Errol Anderson of Pro Market Communications in Calgary.
Read Also
U.S. grains: Soybeans pressured by lack of Chinese demand; corn rises on export sales
Chicago soybean futures came under pressure on Thursday on a lack of Chinese demand for the U.S. oilseed while corn futures ticked higher on strong export sales data, analysts said.
“The money’s trying to find a home and the grain sector was targeted.”
P.I. Financial broker Ken Ball had the same view.
“Not one bushel of fundamentals has changed in the market. There’s nothing fresh. There’s nothing new,” said Ball.
Crude’s collapse is the likeliest trigger for the Monday crop futures rally. Some investors want to stay long commodities (expectation of price increase), so they have sought what looks least bearish of the bunch.
“A lot of money seems to shuffle and circulate around year-end and early into the new year,” said Ball.
The most-noted crop fundamentals news Monday was the incoming bitter cold for the U.S. hard and soft red winter wheat area. With little snow cover on the southern plains, winter wheat plants will be vulnerable to winterkill.
But wheat futures rose less than canola, corn or soybeans Monday, undercutting the argument that the snow-free factor has not already been factored into the market.
Canola ran higher as soybeans soared, but only travelled part way, with traders believing the bull move had little staying power.
“Traders just wouldn’t take it up with the U.S. markets,” said Ball.
“At times (when U.S. crops soar or slump due to technical, speculative factors) canola traders just back away.”
Canola futures rose $5.60 per tonne for March, to hit $448.60, but that was about $10 per tonne less than if canola had been in lockstep with soybeans, Ball said.
Soybean prices have been tempestuous in recent weeks, with bouts of strength and weakness providing much entertainment for market watchers.
Traders are watching the progress of the Brazilian soybean crop, some of it only weeks from harvest, to see how it will affect U.S. soybean exports and prices.
Recent dryness in the region is causing some trader gums to flap bullishly, but other soybean watchers say the situation is not yet a problem.
That tempest in soybean trading pales beside the volatility in crude oil, mostly to the downside, and the knock-on effect that has been having in world equity markets.
U.S. stock markets fell hard Monday, with an over-300 point drop in the Dow 30 by mid-afternoon.
Other than oil, markets were rattled by Greece’s wandering close to the euro exit door, causing that currency to fall and the U.S. dollar to rise. European markets fell as deflationary pressures mounted across the continent.
Light crude oil nearby futures in New York closed down $2.65 to US$50.04 per barrel.
The Canadian dollar at noon was US84.84 cents, down from 85.27 cents the previous trading day. The U.S. dollar at noon was C$1.1787.
The Toronto Stock Exchange’s S&P/TSX composite index closed down 360.95 points, or 2.45 percent, at 14,392.70. Nine of the 10 main sectors on the index were in the red.
The Dow Jones industrial average fell 325.27 points, or 1.82 percent, to 17,507.72, the S&P 500 lost 37.18 points, or 1.81 percent, to 2,021.02 and the Nasdaq Composite dropped 74.24 points, or 1.57 percent, to 4,652.57.
Winnipeg ICE Futures Canada dollars per tonne
Canola Jan 2015 461.70 +6.40 +1.41%
Canola Mar 2015 448.60 +5.60 +1.26%
Canola May 2015 441.70 +4.90 +1.12%
Canola Jul 2015 439.40 +5.10 +1.17%
Canola Nov 2015 429.00 +5.70 +1.35%
Milling Wheat Mar 2015 226.00 +4.00 +1.80%
Milling Wheat May 2015 228.00 +3.00 +1.33%
Milling Wheat Jul 2015 230.00 +3.00 +1.32%
Durum Wheat Mar 2015 365.00 -15.00 -3.95%
Durum Wheat May 2015 355.00 -15.00 -4.05%
Durum Wheat Jul 2015 345.00 -15.00 -4.17%
Barley Mar 2015 177.00 unch 0.00%
Barley May 2015 179.00 unch 0.00%
Barley Jul 2015 181.00 unch 0.00%
American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound
Chicago
Soybeans Jan 2015 1039.75 +37.25 +3.72%
Soybeans Mar 2015 1045.25 +37.75 +3.75%
Soybeans May 2015 1052 +37.25 +3.67%
Soybeans Jul 2015 1057.5 +37 +3.63%
Soybeans Aug 2015 1055.25 +35 +3.43%
Soybeans Sep 2015 1037.25 +33.25 +3.31%
Soybean Meal Jan 2015 369 +12.5 +3.51%
Soybean Meal Mar 2015 354 +13.6 +4.00%
Soybean Meal May 2015 346.5 +12.4 +3.71%
Soybean Oil Jan 2015 32.7 +0.75 +2.35%
Soybean Oil Mar 2015 32.87 +0.78 +2.43%
Soybean Oil May 2015 33.04 +0.77 +2.39%
Corn Mar 2015 406 +10.25 +2.59%
Corn May 2015 414.75 +10.25 +2.53%
Corn Jul 2015 421.25 +10 +2.43%
Corn Sep 2015 423.5 +10 +2.42%
Corn Dec 2015 429 +9.5 +2.26%
Oats Mar 2015 306 +3.75 +1.24%
Oats May 2015 308 +4.5 +1.48%
Oats Jul 2015 310.75 +4.25 +1.39%
Oats Sep 2015 308.75 +4 +1.31%
Oats Dec 2015 306.75 +2.5 +0.82%
Wheat Mar 2015 589 +7.75 +1.33%
Wheat May 2015 593.75 +7 +1.19%
Wheat Jul 2015 596 +7 +1.19%
Wheat Sep 2015 602.75 +6.5 +1.09%
Wheat Dec 2015 612.25 +5.5 +0.91%
Minneapolis
Spring Wheat Mar 2015 621.5 +10.5 +1.72%
Spring Wheat May 2015 628.5 +9.5 +1.53%
Spring Wheat Jul 2015 635 +8.5 +1.36%
Spring Wheat Sep 2015 640 +7.75 +1.23%
Spring Wheat Dec 2015 648 +8 +1.25%
Kansas City
Hard Red Wheat Mar 2015 624.75 +7.75 +1.26%
Hard Red Wheat May 2015 629.5 +7.5 +1.21%
Hard Red Wheat Jul 2015 631.25 +7 +1.12%
Hard Red Wheat Sep 2015 642 +7 +1.10%
Hard Red Wheat Dec 2015 655.25 +5.75 +0.89
