Fifth time lucky.
Commodity prices managed a bounce heading into the weekend,
allowing the CRB index to close higher for first time this week, if by a modest
0.7%, recovering from a 14-month closing low to the last session.
But not all ags joined in with the revival.
Certainly, many dived in with gusto.
futures notched up their biggest one-day rise a year in New York, bouncing 5.6%
from a 16-month closing low to end at 123.00 cents a pound for September
The rebound tallied with ideas that the selling which had shrunk
the arabica premium over robusta coffee to its lowest since at least
2008 in the last session had gone too far, as Agrimoney.com reported earlier.
In fact, arabica futures far outpaced robusta coffee for
September, which added 2.4% to $2,078 a tonne, but nonetheless allowed the arabica
premium to rebuild to nearly 29 cents a pound.
'Due a rally'
Also in New York, raw
sugar for July gained 0.8% to 13.17 cents a pound – albeit only after touching
a fresh 16-month low of 12.76 cents a pound.
"The markets are oversold and due a rally," said Sucden
Financial, if adding that "it is hard to step in when the selling is so
relentless, and it is doubtful that a rally could be sustained long enough to
force short-covering in size, so may be temporary".
What did help sentiment was recovery in oil prices, which is
linked to sugar via ethanol (a rival product to the sweetener from cane/beet
Brent crude added
0.9% to 45.62 a barrel, positing a second-successive positive session, and
recovering further from seven-month lows.
Cotton managed a
bit of a pre-weekend recovery in New York too, adding 0.4% to 67.02 cents a
pound for December delivery, if only after touching a fresh nine-month low of 66.33
cents a pound earlier.
Louis Rose at Rose Commodity Group again underlined the decent
US weekly export data as released on Thursday, saying that "demand for US bales
for export remains extremely strong.
"Total sales against 2017-18 approached unbelievable at
almost 435,000 running bales."
"Many organisations have noted the recent slowdown in old
crop sales and shipments, but it is now the new crop data that we should be
mostly concerned with.
"And demand for US bales yet to be harvested is exceptional."
'Flash flood and
The cotton market
is also keeping an eye on the course of Tropical Storm Cindy, which made
landfall near the Texas-Louisiana border, ie in prime cotton-growing country.
"The system has brought rainfall and will bring more
accumulations across most of the Mid- South and South Eastern US cotton growing
areas as it moves east/northeast out of Louisiana," Mr Rose said.
"Total accumulations are expected to be 2-6 inches with
localised heavier amounts with flash flood and tornado watches and warnings
posted across much of the south."
Ie, there is cause for concern among cotton growers over the
extent of rains, as well as optimism over the coming of moisture.
For investors in other row crops, however, notably corn and soybeans, it appeared the hopes for rains brought by Cindy which
were really in play.
"Weather leans negative [for prices], with the tropical
storm throwing more precipitation into the central and eastern Midwest than expected,"
said Richard Feltes at RJ O'Brien.
"Nearly the entire Midwest will benefit from 1-3 inch rains
during the 6-10 day period while the entire mid section of US enjoys cooler-than-normal
temperatures for next week."
MDA said that "the remnants of Tropical Storm Cindy will
bring heavy rainfall to the Delta today and will enhance rainfall across the
south eastern Midwest later today, improving soil moisture for corn and soybeans.
"The 6-10 day period has continued to trend wetter, with
above normal rainfall expected" for the Midwest, the weather service added.
South America vs US
Meanwhile, there remain worries on the demand side over the
enhanced competition that US corn faces from rrival South American supplies.
"South American export offers are undercutting [US] exports
in a big way right into new crop," said Tregg Cronin at Halo Commodity Company.
"There's no Brazilian drought this year to make the US the
only game in town."
Corn futures for July dropped 1.0% to $3.57 ¾ a bushel, an
eight-month closing low.
fared a little better, despite too seeing US production prospects favoured by US
CHS Hedging flagged support from "short covering/profit
taking after yesterday's blow-out", which saw the July contract record the
weakest close for a spot contract in 14 months.
Furthermore, there was minor support by a plan by Paraguay,
South America's third-ranked soybean exporter to put a 10% tax on shipments – a
proposal approved by the country's senate, but which could yet be undone by government
opposition, after farmer protests.
Meanwhile, China reminded of its firm import demand, up to
now, reporting imports so far in 2017 at 37.1m tonnes, a 20% jump year on year.
Still, although soybeans for July did manage to close 0.2%
higher at $9.04 ½ a bushel, it was the only contract in the complex ending up.
'Dry weather is
As for the wheat complex, Minneapolis spring wheat did manage to close higher, adding 0.8% to $6.61 ¼ a
bushel for July, a fresh two-year closing high for a spot contract, and 0.8% to
$6.66 ¼ a bushel for September delivery, continuing to gain support from
northern US drought.
"Dry weather is expected through early next week in the
northern Plains, maintaining significant soil moisture deficits and stressing
spring wheat," MDA said, if adding that moisture looked on the way later next
"Many US yield estimates are already 40 bushels per acre or
below, which would automatically push production below 400m bushels and put us
in extreme rationing mode," said Halo Commodity Company's Tregg Cronin.
However, winter wheat
again got caught by a negative undertow from corn, dropping by 0.3% to $4.59 ¾ a
bushel in Chicago for July delivery, and by 0.5% to $4.73 ½ a bushel for
Even so the July contract closed back above $1.00 a bushel
above July corn, a premium 75% higher so far this month.
It was some help to Chicago wheat that the condition of the French
crop was downgraded again, after hot weather which is viewed as having been
deleterious for output.
"The market is seeing some support in the heatwave sweeping
through Europe," CHS Hedging said.
That said, "a cooler forecast for France has the market down
from recent highs".
Paris wheat for December did manage to close higher, but by
a modest 0.3% at E178.00 a tonne.
'Concern for wheat,
corn, and sunflowers'
Worries over Ukraine's crops also remain live.
"Dryness remains a concern for development of wheat, corn,
and sunflowers across Ukraine,
Belarus, and far southern Central Region" of Russia, said MDA.
"Showers are expected in Belarus and Ukraine today and again
on Monday, which should lead to minor improvements, but more rainfall will
still be needed."