PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 21:27 GMT, Wednesday, 14th Nov 2012, by Agrimoney.com
Evening markets: cocoa, soybeans rise above ag mediocrity

Some agricultural commodities managed to buck a somewhat negative day on financial markets.

But it took a good story to do so.

Shares fell, by 1.0% in London and 1.1% on Wall Street in late deals, undermined by soft economic data besides the lingering fears over the US fiscal cliff and the eurozone debt crisis.

US retail sales fell by 0.3% last month, a little more than economists had expected, while eurozone data showed factory output in September falling by 2.5%, the sharpest drop since January 2009, at the depths of the global financial crisis.

"I would not be surprised to see a relatively large percentage of investment capital stay on the sidelines for the time being," Minneapolis broker Benson Quinn Commodities said, flagging "never-ending concerns about the state of the global economy".

'Living on the edge'

That was the order of the day in many markets, such as wheat, which dropped in Chicago despite data showing the US winter crop deteriorating faster than had been expected last week, and with little chance of respite from dryness in the Plains for now.

"The weather is trending dryer for the US hard red winter wheat belt next week, portending further slippage in a 20-year low in late-autumn hard red winter wheat prospects," Richard Feltes at RJ O'Brien said.

AgResource came out with some upbeat comments on prices too, of corn as well, cautioning over thin supplies, which looked set to spark a rebound in values.

"We're living on the edge in terms of grain supply," AgResource president Dan Basse told a conference in Geneva.

"We see this corrective decline in the grains in particular as short term. We're still looking at wheat and corn possibly making new highs."

'Demand is lacking'

But one problem was on demand.

"Algeria, Tunisia and Jordan are all working tenders with results of the Iraq tender expected in about a week," Benson Quinn noted.

However, of the deals announced, a purchase by Syria of 100,000 tonnes, and of Jordan by 50,000 tonnes, were believed to have been of former Soviet Union/Black Sea supplies.

Furthermore, there were comments over the continued absence of Egypt, the top importer, from tenders despite the break in prices.

And Strategie Grains chipped in late with upbeat comments on prospects for the 2013 European Union soft wheat crop, which could see a 19m-tonne rise under best-outcome weather.

Wheat for December closed down 0.5% at $8.46 a bushel in Chicago, although the consolation for bulls was that the lot remained within its four-month trading range, and indeed stayed above the last session's low too.

Export support

Soybeans managed gains.

But they needed to pull out some ace cards to do so.

One was a sale of 120,000 tonnes of the oilseed to China, a deal which took on unusually large significance given talk this week of the top soybean importing country cancelling orders in the face of weak domestic crushing margins.

Exporters sold 40,000 tonnes of US soyoil to unknown destinations too.

And as an extra sign of strong export demand, basis levels in Gulf of Mexico ports rose again, "with the soybean basis at the Gulf now $1.01 a bushel over the January futures", Darrell Holaday at Country Futures noted.

'Margins are very good'

Furthermore, domestic data was supportive too, with the US soybean crush hitting 153.5m bushels last month a full 8m tonnes above market expectations.

"Crush margins are very good in the interior and we will continue to see a solid number in November if it stays that way," Mr Holaday said.

The improved margins have not gone unnoticed by the USDA either, which said overnight that thanks to the 20% pullback in soybean prices from September's record high means "domestic processors are now modestly more competitive and can extend the sales of soybean meal into foreign markets".

January soybeans added 0.8% to $14.19 a bushel.

Hot cocoa

Another crop with a strong story was cocoa, which jumped 2.9%, to settle at $2,457 per tonne in New York, for March delivery, after Alassane Ouattara the Ivory Coast president, dissolved the country's government.

Mr Ouattara claimed differences within his coalition cabinet for the move, which raised fears for supplies from the top cocoa-producing country, whose political instability has a history of feeding through into the market for the bean.

London's March contract rose 2.8% to 1,592 a tonne.

'Significant rumour'

However, back in Chicago, corn could not match that, rising by a modest 0.3% to $7.38 a bushel, retaining its usual position of late between its row crop peer soybeans and fellow grain wheat.

Still, besides the comments from AgResource, corn also received some support from a firming Gulf basis too, and rumours of another large export sale to Mexico.

"There is rumour of a 200,000-tonne corn sale to Mexico. Not confirmed by a significant rumour," Mr Holaday said.

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