A day which began on a negative note for agricultural
commodities ended less so - at least for soybeans,
and for arabica coffee which hit a
The negative impact of soft Chinese factory data, with an HSBC/Markit
"flash" purchasing index of manufacturing activity fell to 50.5 this month from
50.8 in November, waned as Monday matured.
European and Wall Street shares failed to follow the
negative lead from Asia, with London stocks closing 1.3% higher and the Dow
Jones Industrial Average up 0.9% in late deals.
And that was one help for soybeans, of which Chinese is the
top importer, which shrugged off a negative close to end up 0.8% a $13.37 ¾ a bushel
in Chicago for January delivery, ending back above its 10-day moving average.
The oilseed had other props too to support it in the face of
US crush data for November which, at 160.1m bushels, were strong - and indeed up
from 157.1m bushels in October the best for a November since 2009 - but not as
strong as the 161.3m bushels that investors had expected.
One was a strong US export figure, with shipments, as
measured by cargo inspections, averaging 62.5m bushels, well ahead of estimates
of a 52m-58m-bushel number.
Only some 19.2m bushels a week are needed to meet the US
Department of Agriculture estimate for US soybean shipments for the full 2013-14.
Up to eight inches of
Of course, US exports are expected to see a sharp drop in
2014 as bumper South American crops come onstream.
But doubts began to grow about exactly how bumper these will
be, too, with dryness emerging in Argentina.
"The weather models continue to show a very distinct wet vs.
dry pattern over South America," weather service WxRisk.com said.
"Over the next five days both the European and the GFS
models continue show this wide band of heavy rains coming in from the southwest
portions of the southern Atlantic Ocean into east central Brazil," giving rains
of 2-6 inches.
"The European model is developing areas of 8 inches over
northern Minas Gerais."
However, "most of south eastern Brazil Paraguay and all of
northern, central and eastern Argentina remain completely dry.
"Temperatures in the next five days will be above normal
While generally only warmer than average "by a few degrees ,
La Pampa will see temperatures turn much above normal over the next five days".
And the pattern "shows no sign of changing" heading into Christmas.
While hardly cause for panic, the forecast did encourage
investors to inject a little risk premium back into soybeans.
At Jefferies Bache, senior oilseed analyst Anne Frick said
that "it is not certain how long this ridge might hold, but while it is in the
picture we will see hot, dry weather impacting central agri areas of Argentina especially,
but southern areas of Brazil to some extent as well.
Grains, however, remained on the downward path.
For corn, the
prospect of some damage to the South American crop is not so vital, given the
record US harvest, which has replenished domestic stocks far more convincingly
that the strong soybean crop.
Furthermore, US export data were weak, at 25.1m bushels,
down from 40.5m bushels the previous week.
And, while Morgan Stanley may be relatively upbeat about
corn prices, the concerns about China's rejections of US cargoes continues to
concern investors, even if it does mean more sorghum shipments.
"The corn market is under pressure due to concerns that
China may reject further GMO corn," CHS Hedging said.
Corn for December closed down 0.5% at $4.23 ¼ a bushel in
Chicago for March delivery.
Winterkill fears ease
For wheat, US
exports were not so encouraging either, at 17.6m bushels, although still ahead
of the average of 15.4m bushels needed to meet the USDA forecast for 2013-14.
The showing by Australia as significantly the cheapest grain
offered to an Iraq tender did little to support Chicago prices, while industry
group Coceral chipped in for bears by raising its estimate for European Union
soft wheat production by 600,000 tonnes to 135.9m tonnes.
Furthermore, concerns over crop loses to cold are fading,
with CHS noting that "snow cover in the eastern and central growing areas in
the US should reduce the risk for winterkill".
And with a Russian upgrade to hopes for the 2014 grains
harvest, and little expectation of winterkill in Europe either, Chicago wheat
for March dropped 1.1% to $6.24 ¾ a bushel, a fresh contract closing low.
Paris wheat for January eased 0.2% to E208.00 a tonne,
continuing to gain some support from last week's strong European Union export
Still, a further test of export competitiveness comes on
Tuesday, with the announcement of an Egyptian Gasc tender unveiled after the
close of markets on Monday.
Among soft commodities, raw
sugar managed to close flat at 16.27 cents a pound for March delivery,
after earlier falling to 16.24 cents a pound, but with some ideas that hedge
funds may have sated their desire for short positions.
Data late on Friday revealed a record slump in speculators' net
long position in the sweetener, raising questions over whether selling appetite
was sated for now.
which has also been under the weather amid ideas of a huge world surplus, did
better, closing up 0.4% for March delivery at 115.30 cents a pound.
Besides being pulled up by robusta coffee's performance in the
last session, investors also have data from Brazil's Conab crop bureau on
Friday to factor in.