Not for the first time, agricultural commodities ran into a
bit of "buy the rumour, sell the fact" thinking.
The casualty was soybeans, whose run of resilience, even
when grains were falling, ran into a pre-weekend selling drive, despite having
some strong fundamental news to throw at investors.
Strike in Santos
In Brazil, port workers began their strike, as threatened,
halting the loading of the likes of soybeans, sugar and corn onto boats in the
main port of Santos, and slowing operations at other docks.
And this when queues of boats waiting to load up, and
lorries to unload, were already long.
Santos had 59 boats waiting to load grain as of Thursday,
twice as many as a year before, according to SA Commodities/Unimar data.
At Paranagua, the queue was 82, compared with 31 a year ago.
So it was not perhaps too surprising that the US Department
of Agriculture was able to confirm rumours that China had been in the market for
more than the 120,000 tonnes of US soybeans revealed so far this week (and maybe
more, with a 130,000-tonne order booked separately to "unknown").
China purchased a further 410,000 tonnes of soybeans,
including 60,000 tonnes of 2012-13 crop, the USDA said.
However, the fact proved less supportive to prices than the
rumour, which had helped drive prices of Chicago's March contract up to $15.16 ½
a bushel in early deals, the lot's highest since early December.
Having found $15 a bushel difficult to break through early
in the month, the contract found it tricky to keep hold of on Friday, and stood
1.0% lower at $14.73 a bushel with half an hour's trading to go.
'Disappointing to the
In truth, weekly export sales data released separately, for
last week, offered cause for some alarm, in showing net cancellations of
119,500 tonnes of 2012-13 soybeans, the worst old crop reading since July 2011.
It was also more than enough to offset sales of 62,000 for
"That was disappointing to the market and was one of the
reasons the market backed up," Darrell Holaday at Country Futures said.
That said, the data did refer to a period when many Asian
buyers, including China, were out for lunar new year holidays.
"Keep in mind, most of the recent sales have occurred since
last Thursday and will not show up until next week's export sales report," Mr
Furthermore, the USDA, at its Outlook forum, forecast a
healthy rebound in US soybean stocks in 2013-14, to 250m bushels (6.8m tonnes),
which would be a seven-year high.
The forecast reflected the idea of a record, 4.55bn-bushel
harvest, as outlined on Thursday, but with the domestic crush not recovering to
2011-12 levels, from volumes this season affected by the impact of drought-hit
harvest in shortening supplies.
"The numbers released continue to be negative," broker US
'Sell the rumour…?'
The USDA forecasts were downbeat for corn too, in showing stocks more than tripling, nearly to 2.1bn
bushels in 2013-14.
And that figure could prove even greater if the
International Grains Council proves correct, and sowings come in nearer 99m
acres than the 86.5m acres the USDA is forecasting.
Still, if there was hope, for bulls, it was from a little "sell
the rumour, buy the fact" thinking.
After all, "the negative numbers have been anticipated for a
number weeks", as US Commodities said.
"Last year the USDA projected similar negative numbers,"
only to see drought shatter crop hopes.
'Today is the chance'
In fact, "today is the chance" for grain bulls, if they are to
pull corn and wheat out of their declines.
US Commodities said: "Corn and wheat are extremely oversold.
The market needs to react positive to negative news," if it is to really show
As an extra help, US corn weekly export sales data came in
380,000 tonnes, old crop and new, above market expectations, and making it the
third best week of 2012-13 so far.
And China was reported to have bought a stack of new crop
'Cut the deficit in
However, corn struggled to hold on to positive ground,
standing 0.25 cents higher at $6.91 a bushel, as its fellow grain wheat sank under the weight of snow
fallen on needy hard red winter wheat areas.
"The blanket of snow over a large part of the hard red
winter wheat area has capped rallies in wheat," Mr Holaday said.
Gail Martell, at Martell Crop Projections, said: "Heavy
storm precipitation spells relief in the US heartland where wheat is imperilled
"A two-inch moisture deficit had built up in the hard red
winter wheat area since early October.
One inch of precipitation would cut the deficit in half."
Chicago wheat for March stood 0.3% lower at $7.19 ¾ a
And the drop might have been even steeper, but for a strong
set of wheat export sales data too, of more than 750,000 tonnes old crop and
new - the best figure, but one, in eight months.
"The wheat number was once again solid," Mr Holaday said.
Also offering some support were ideas from the International
Grains Council and the USDA that while the world wheat crop may improve sharply
in 2013-14, stocks will not see a rebuild.
Earlier, Paris wheat for May closed down 0.3% at E237.50 a
tonne, while London wheat for Masy ended down 0.3% at £206.10 a tonne.