There were bulls around in agricultural commodity markets on
Tuesday, but you had to travel well beyond Chicago to find them.
New York soft commodities showed healthy advances, with arabica coffee soaring 5.2% to 197.45
cents a pound for December delivery, the contract's best close but one in three
The jump, which also took the lot healthily back above its 10-day,
20-day and 100-day moving averages, reflected a forecast by Neumann Kaffe
Gruppe, the German coffee trader, which underlined that Brazil's production will
remain depressed next year.
The group pegged Brazil's 2015-16 harvest at 45m bags, down
2.7m bags from its previous estimate, besides the 49.2m bag-harvest last year,
on Conab estimates.
(Brazil's cycle of higher and lower production years makes
2013 the most appropriate comparison for 2015.)
Many commentators have cautioned that factors such as weak tree
growth – beans are borne on vegetation produced the year before – and a trouble
start to blossoming mean that the hangover from this year's drought will
stretch meaningfully into next season.
Robusta coffee, of which Vietnam is the top producer, was
helped 1.5% higher to $2,027 a tonne in London, for November delivery, retaking
its 50-day and 75-day moving averages.
'Prices too low'
Also in New York, raw
sugar for October showed strong headway, rebounding 2.3% to 15.71 cents a
Early in the day, Commerzbank issued an upbeat price
forecast, predicting a rise in prices to 17 cents a pound by the end of 2014.
"In view of the noticeably dwindling dynamism of the
Brazilian sugar cane harvest and signs that the supply surpluses are coming to
an end, we believe the 10% price fall within the last four weeks to be
excessive and view the current price level as too low," the bank said.
And the bank was given immediate gratification after Unica,
the Brazilian cane industry group, cut its forecast for the cane harvest in Brazil's
key Centre South area to 546m tonnes, from a previous estimate of 580m tonnes.
The estimate for the region's sugar output was cut by more
than 1.1m tonnes to 31.4m tonnes.
The downgrade, when futures were already near seven-month
lows, more than offset the impact of a gloomy price forecast from the International Sugar Organization.
Late in the day, the market also heard that the US has
slapped anti-subsidy import duties on Mexican sugar, although any impact on
futures looks unclear.
Also outside Chicago, canola
for November nudged 0.7% higher to Can$423.40 a tonne in Winnipeg, while Paris rapeseed ended 0.9% up at E324.25 a tonne.
Oil World, even while raising by 2,2m tonnes to 507.2m
tonnes its forecast for world oilseeds production in 2014-15, flagged the 1.0m-tonne
drop to 68.7m tonnes expected for rapeseed/canola.
And Standard Chartered said that "the outlook for Canada's
canola production is of particular concern," with wet weather on the Prairies "adversely
affecting harvesting and crop quality.
"Production shortfalls in Canada are likely to dampen
China's vibrant canola imports from Canada, which rose more than 40% year on
year in the first half of 2014."
Alberta also saw some frost at the weekend, deemed to have
caused a little crop damage.
'Air out of the
However, the strength did not carryover elsewhere in the
oilseeds complex to Chicago soybeans, which dropped, if with losses focused on
the close-to-expiry, old crop September contract, which was undermined by a
reversal in the US cash market which sent prices soaring last week.
"The air has completely come out of that balloon," Darrell
Holaday at Country Futures said.
At RJ O'Brien, Richard Feltes said that the "collapse" in September
soybeans, and soymeal, which dropped
4.3% to $388.70 a short ton, was being fuelled by a "modest pick-up in old crop
soybean sales, a lower CIF [export] soybean market, and an early harvest push
by southern growers anxious to capture record high inverse".
(Ie, to exploit the relatively high old crop prices, compared
with new crop values.)
In fact, new crop November soybeans eased only a 0.1% to $10.28
a bushel, albeit a fresh contract closing low, despite expectations for further
decent growing weather, and no signs of crop-damaging frost as yet for the Midwest.
"Long-range weather forecasts have no frost, little warmer
temperatures and plenty of moisture to finish out the row crops," Allendale
However, the contract did get a little bit of technical support
from the sell-off in the September lot.
"There is major liquidation in the long September-short November
spreads after the major top in that spread yesterday," Mr Holaday said.
For corn, the
decent US weather outlook was a negative too, especially at a time when the US
crop is in fine health.
The US Department of Agriculture overnight lifted its rating
on domestic corn to 73% deemed "good" or "excellent", the highest figure for the
time of year since at least 1993.
Influential crop scout Michael Cordonnier raised his
estimate for the US corn yield by 1 bushel per acre to 170 bushels per acre
(nudging higher his forecast for the soybean yield too, by 0.5 bushels per acre
to 45.5 bushels per acre).
December corn dropped 0.7% to $3.65 a bushel, with many
expecting a new lurch lower in prices to a harvest low around October.
Wheat did better, helped by the continuing concerns over the impact on US harvest progress of the moisture helping soybean and corn development.
"Harvest-delaying rains may still affect the quality of the
spring wheat crop, which is lending mild support to the market," CHS Hedging
Rains are, after all, helping prepare seedbeds for winter wheat
It was difficult, from a US perspective, to read too much into
the results of an Egyptian tender, with US supplies not offered.
An extra consideration for the wheat market, which is
difficult to read for now, is a meeting between Russian President Vladimir
Putin and his Ukrainian counterpart, Petro Poroshenko.
Wheat prices have moved largely in line with Russia-Ukraine
tensions, given that both countries are major exporters of the grain.
For now, Chicago wheat, the speculators' favourite, added
0.4% to $5.56 ½ a bushel, but other contracts fell.
Kansas City hard red winter wheat fell 0.4% to $6.30 ½ a
bushel, falling below its 10-day moving average, while Paris wheat for November
dropped 0.4% to E172.75 a tonne.