There's no pleasing some people.
Many assets managed to trade higher after the US said that
its unemployment rate had fallen to 7.8%, its lowest point since Barack Obama
took office as president in 2009.]
0.5% on Wall Street, while the safe haven of the dollar eased a touch in a sign of slightly higher risk appetite.
But commodity investors had a bit of a grouch, cutting
prices of raw materials by an average of 1.0% according to the CRB index. Brent
crude, for instance, dropped 1.1%.
The declines were blamed on fears that the improved data
implied that central banks might hold off on economic support drives, so
undermining efforts that would boost demand for raw materials.
Whatever, agricultural commodities were amongst the
decliners, with the notable exception of soybeans, which were just about, with
an hour or so's trading to go in Chicago, succeeding in extending the seasonal
rebound that may have kicked off in the last session.
Sure, there were some negative pressures to soak up,
including forecasts from Informa Economics and Allendale that the US Department
of Agriculture will, next week, raise its forecast for the domestic soybean
"Estimates for soybean yield are rising, with some thinking
average yield could increase to 40 bushels per acre," Paul Georgy, president at
Allendale, said. (In fact, the Allendale forecast was 36.9 bushels per acre.)
"Producers have been pleasantly surprised with soybean yield
improvement due to late season rain."
'In a buying mode'
Furthermore, this weekend looks like another open one for
the US harvest, meaning large supplies off the combine, and less pressure on
buyers, for now.
"Looks like a slow Friday with another big harvest weekend
ahead that should propel soybean and corn harvest to 60%+ on Monday," Richard
Feltes at RJ O'Brien said.
However, keeping soybeans ahead was not just the idea,
supported by history, that soybeans' decline under harvest pressure often
bottom outs in the first week of October, but strong demand ideas too,
especially for exports.
"China has been on a holiday this past week but will be back
to work Sunday night. The trade anticipates China will be in a buying mode,"
broker US Commodities said.
Certainly, the USDA as it was unveiled through its daily
alerts system the sale 180,000 tonnes of the oilseed to China.
And this after the US has already sold 82% of the exports it
has forecast for 2012-13 – now one month into the marketing year.
"We will need to sell only 4m bushels per week to reach the
USDA goal over the next 11 months," the broker said.
No wonder that, as Mr Feltes said, "some analysts suspect
that the longer ag prices remain under pressure, the higher prices will go
later to slash demand".
Especially when fears for logistics, both of incoming
fertilizer now and outgoing exports in 2013, are raising some doubts over Brazil's ability to provide an alternative to depleted US supplies.
November soybeans stood 0.1% higher at $15.53 ¼ a bushel at
13:00 Chicago time (19:00 UK time).
'Demand is really
Still that was better than grains, which dropped again,
lacking the demand pull that underpinned soybeans.
"Demand is really struggling for corn out of the US," Paul Georgy said, noting also the power of an
order of just 10,000 tonnes of the grain.
"South Korea made a symbolic purchase of corn from far
eastern Russia overnight."
Furthermore, US weekly corn sales are running 84% below last
year's pace, and "the price of US corn is $10-15-a-tonne higher than Brazil or
Argentina", questioning whether demand will return.
Indeed, US Commodities added that US corn "remains uncompetitive
in the world market", flagging the risk even of Mexico, one of America's top
customers, turning elsewhere for its hefty orders of the grain.
"They usually purchase this corn from the neighbouring US. Due
to the cheaper South American crop it is possible part of this business will be
shifted to South America," the broker said.
And, with Informa too foreseeing a rise in the USDA corn
yields in next week's Wasde, Chicago's December lot dropped 1.1% to $7.48 ¾ a
'Market is finding
Wheat fell in
line, dropping 1.2% to $8.58 ¾ a bushel for December delivery, meaning it had
given back this week nearly all the 5% jump it put in a week ago, following a lower-than-expected
US inventory estimates.
"US grains are uncompetitive in global marketplace. The wheat
market is finding cheaper offers of EU wheat in the latest Egypt tender,"
Benson Quinn Commodities said.
That took some of the sting from forecasts by Commonwealth Bank of Australia that Australia's wheat shipments will fall nearly 30% in 2012-13 to well below levels officials are factoring in.
In Europe, Paris wheat for November closed down 0.5% at E259.00