Are agricultural commodities losing some of their appeal to
the funds which have been piling money into the sector?
Certainly, some appeared to think it was time to take
profits, with bulls' darling of late, arabica
coffee, rediscovering reverse gear and closing down 1.8% at 169.45 cents a
pound for May delivery.
That still leaves it up 33% for February so far, underpinned
by concerns of large crop losses to drought in Brazil, the top arabica grower
And, indeed, the extent of the rally has raised eyebrows
among some commentators.
'Funds have a tight
Raw sugar, of
which Brazil is also the top producer and exporter, lost some of its fizz too,
falling 0.8% to 16.33 cents a pound for March delivery.
A weaker real,
whose decline lowers the value in dollar
terms of commodities in which Brazil is a major force, hardly helped.
And in Chicago, wheat,
which has also enjoyed a February, found retreated too.
"Funds still have a tight grip on the commodity sector,"
Darrell Holaday at Country Futures said.
"They started the week in that mode and it has generally not
changed, but the momentum has waned somewhat."
'May be pricing
For wheat, there is some concern after all that higher
prices may be deterring buyers, with latest US export data soft.
"US hard wheat may be pricing itself out of the world export
market," CHS Hedging said.
Benson Quinn Commodities said that "global wheat demand,
which isn't great, has viable alternatives to buying US soft wheat.
"Hard wheat business has typically been routine business."
More on US exports will be known on Friday, when the US
Department of Agriculture releases weekly export sales data, expected at 400,000-700,000
tonnes for the grain.
Meanwhile, snow cover looks like growing in many winter wheat
areas ahead of a fresh bout of cold temperatures expected next week.
Snow cover should begin to rebuild across northern Kansas
and Nebraska again today and late weekend," said weather service MDA.
Although cold temperatures in the Plains and the Midwest
next week "will increase ice again on rivers, no notable winterkill is
currently expected on wheat".
Wheat for March closed down 0.6% at $6.16 ¼ a bushel in
Chicago, where the May lot ended unchanged at $6.13 ½ a bushel.
'Should scare short
Fellow grain corn
did better, gaining 0.5% to $4.55 ¾ a bushel for March delivery, the highest
close for a spot contract in five months, lifted in part by fresh unrest in
Ukraine, news that CHS Hedging warned "should scare short traders in corn".
"With the unrest in the Ukraine, the US could see increased
demand for corn in the export markets," the broker said, noting that "although
domestic premiums have a weaker tone, export basis levels are firm".
Furthermore, the dryness in South America is continuing to blip
on the radar, as a danger to sowings of the follow-on safrinha crop perhaps
more than over main crop prospects.
"Dry conditions in portions of South America have raised
concern about the potential of the safrinha corn crop in Brazil," Benson Quinn
And corn got an extra boost from the USDA's first formal forecasts for US sowing this year, which came in at 92.0m acres, down 3.4m
acres year on year, and 1.5m acres below the outline figure pencilled in in
last month's Baseline report.
There was some dispute over the data.
"At first glance, it appears the USDA is light on total
acreage," Benson Quinn Commodities said
US Commodities said that the USDA did not increase acres for
crops overall "to account for the 1.7m acres that came out of [conservation
programmes] last fall, or the prevent plant acres of 8.1m acres from last year.
"The debate remains."
'Not a positive sign'
Still, it all helped corn get over some weekly ethanol data
which some saw as negative.
The report showed a rise of 141,000 barrels in inventories,
to 17.2m barrels, last week on an increase of 1,000 barrels a day in
production, to 903,000 barrels a day, in production.
The briefing "was not friendly for ethanol values", said Country
Futures' Mr Holaday, and indeed the biofuel fell 1.5% to $2.07 a gallon in
Chicago, for March delivery.
A rise in ethanol inventories to the highest level of 2014
had "occurred at the same time that ethanol production was basically unchanged
with a week ago.
"This is not a positive sign for ethanol demand."
For soybeans, the USDA estimate for US sowings was deemed supportive
too, in coming in at 79.5m acres, up 3m acres year on year, but below market
This when demand for old crop US soybeans is not seeing the
reversals that many investors had expected, given the ramp up in South American
"Traders are waiting for some soybean cancellations or
switching by China to South America. There have been no confirmations at this
time," US Commodities said - at least, no cancellations revealed since last
More may be known tomorrow, when the USDA is expected to
reveal weekly export sales of 150,000-500,000 tonnes, old crop and new crop
Furthermore, there are the lingering concerns that South American
crops may fall short of, lofty, expectations.
"Soybeans in southern Brazil started deteriorating in the
past three to four weeks due to dryness - February is the main pod-filling
month for the crop," US Commodities said.
And in Argentina, the farm ministry cut by 500,000 hectares
to 20.3m hectares its estimate for domestic soybean sowings for the forthcoming
harvest, citing dry weather at planting time.
Soybeans for March gained 0.3% to $13.58 ¼ a bushel, while
the better-traded May lot closed up 0.4% at $13.47 ¾ a bushel.
Soyoil helped by
rising 0.7% to 40.82 cents a pound for May, lifted by a 1.7% rise in rival vegetable oil palm oil to 2,755
ringgit a tonne in Kuala Lumpur, the best close since September 2012.