EF Hutton was a US stockbroker which became something of an icon in the 1970s and 1980s, famous for an advert that said "when EF Hutton talks, people listen", before running into scandals and seeking refuge in a merger with Shearson Lehman.
Anyway, China today is, for agricultural markets, apparently like EF Hutton was (in the days before it was indicated for unfair financial dealings, of course) more generally.
"China appears to have taken over the role of the old EF Hutton group. But instead of when they talk it’s when China buys or is rumoured to have bought the trade will sit up and listen and take notice," Jon Michalscheck at Benson Quinn Commodities said.
And China had plenty to say on Thursday.
Imports dip
First, it revealed imports of soybeans down 11%, year on year, last month at 4.13m tonnes, and down from August’s 4.51m tonnes.
Imports of vegetable oils fell 17.4% month on month to 570,000 tonnes too.
China also lifted by 2m tonnes to 184.5m tonnes its forecast for the domestic corn harvest this year.
Just as the US Department of Agriculture seemed to be catching up on Chinese production, raising its own forecast by 4.0m tonnes to 182.0m tonnes on Wednesday, the China National Grain and Oils Information Centre pulled away again.
… but more on their way?
What China did not say, and what Chicago would definitely listen too, was whether it had bought all the corn and soybeans it is speculated to have done in recent days.
Estimates differ for the extent of China’s supposed buying spree, and where it was undertaken. But common estimates currently are about 800,000 tonnes of soybeans and 1.5m tonnes of corn, with 120,000 tonnes of soyoil on top.
Maybe one day China will become more transparent, as it has incopper, where, according to the Financial Times, the country has let slip that it had 1.9m tonnes of copper stockpiled at the end of 2010.
That figure is higher than analysts had thought, and contributed to a 1.6% slip in London copper in early deals.
Prices ease
Whatever, China’s showing of falling soybean imports last month, and a raised corn crop estimate, did Chicago futures no favours, especially when confirmation of huge orders this week is proving elusive.
Signals from external markets were hardly upbeat either, with crudemaking heavy weather of it, after China’s data showed a dip in oil imports last month too, and the dollar tending slightly higher.
Chicago corn for December fell 0.3% to 6.38 ¾ a bushel while the November soybean lot dropped 0.4% to $12.34 ¾ a bushel, as of 07:30 GMT (08:30 UK time)
‘Bearish for cotton’
The surprise was that wheat and cotton, two crops whose supplies were loosened by Wednesday’s USDA crop revisions, did better.
As Luke Mathews at Commonwealth Bank of Australia said, the USDA’s Wasde crop report "was bearish for cotton.
"The USDA raised its cotton output estimate, reduced its demand estimate, and increased its US and world cotton stocks estimate. The global stock situation does not support 100 cents-a-pound cotton prices."
New York cotton for December added 0.2% to 100.68 cents a pound for December delivery.
‘Bearish for wheat’
As for wheat, the obituaries kept rolling in after the USDA lifted its estimate for world stocks to a 10-year high of 202m tonnes.
Mr Mathews said: "The Wasde was bearish for wheat. The last time the stocks-to-use ratio was this high was in 2009-10. In that year prices fell to $4.25 a bushel, well below current values."
In Singapore, Lynette Tan at Phillip Future also termed the Wasde "bearish" for the grain, "as supplies in wheat producing countries were mostly up, with the main exporters continuing to provide competition to US wheat with cheaper prices".
Etcetera. Dave Lehl, at Benson Quinn, spoke for many when he said that "wheat still looks to have more downside potential.
"If it is to have an upside, wheat will need to be led by corn and/or a significant improvement in the global economic outlook. Left to its own fundamentals, wheat looks weak."
Spreading?
Still, perhaps due to the fact that so many investors had positioned themselves on the short side on wheat already, the grain added 0.1% to $6.27 ½ a bushel in Chicago for December delivery.
There is also some idea of a closure of "short wheat, long corn" spreads putting the grains on the opposite footing to that which might be expected.
Rough rice was again a better performer, adding 0.6% to $16.460 a hundredweight for November delivery, supported by a downgrade to the US crop to a 13-year low in the Wasde, besides concerns of damage caused by flooding in Thailand.
‘Worsening flooding’
In Tokyo, rubber managed price gains too, of 0.3% to321.00 yen a kilogramme for the benchmark March lot, also on the inundations in Thailand, the top exporter.
Still, perhaps negative for the demand side, the flooding has impact car production too.
"The South East Asian nation is a major production and export hub for global auto makers including Toyota Motor, Ford and Honda," Ker Chung Yang at Phillip Futures said.
"All three have shut their plants in the country after weeks of worsening flooding overwhelmed a cluster of component plants in Ayutthaya, 42 miles north of Bangkok."
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