Evening markets: commodites see mixed flows, await Wasde

Commodities rounded off a somewhat choppy but largely directionless  as the CRB Index stood little changed on the week at the close.


Commodities have been in for a turbulent week, reacting to ongoing development in the middle-east and between Russia and the west as the Russian government announced a ban on food imports from various western nations in a run of tit-for-tat sanctions.


Wider financial markets echoed the sentiment with equity markets indicating some regional divergence as the Dow stood up 0.9% near the close while the UK FTSE, German Dax and French Cac were down by an average 0.3%.


Grain and soft commodity markets were also awaiting next week monthly Wasde report

From the US Department of Agriculture for the latest updates.


"Trade appears to be at equilibrium going into next week's USDA report. The hope is to get USDA's take on how big the 2014 crop really is," Paul Georgy of Allendale, Inc., said, many having exited positions, heading for the "sidelines ahead of the August USDA Supply and Demand report."


Wheat took a dive towards the end of the trading day with September futures sliding as much as 2.6% after Wednesday rally back towards $6 a bushel stalled.


Chicago wheat futures for September delivery stood down 2.2% at the close, at $5.49 ¼ a bushel.


Wheat has been under consistent pressure since the May peak of $7.51 ½ a bushel amid expectation a surge in global supplies.


"Fundamentally the situation in the wheat is bearish, and the recent bounce appears to be over at least up to report time," suggest Sterling Smith of Citigroup.


"Unless there is a severe escalation in the Ukrainian situation, prices should see some mild pressure," suggested Mr Smith, noting a lack of El Niño in some wheat growing areas.


Australia's Bureau of Meteorology recently lowered its projections for the chance of an El Niño event in the second half of 2014 to 50% from 70% previously.


Wheat also shrugged of positive demand indicators from China as grain imports increased 20% in July to 1.56m tonnes, according to figures from General Administration of Customs.


Imports into China total some 11.34m tonnes in the first seven months of 2014, a jump of some 80.6% on the January-July period of 2013.



Corn in "grips of a bear market"

Corn futures succumbed to similar pressure to wheat, reversing yesterday's modest gains with December futures down 2.1% at the close and homing in on Monday's low of $3.61 a bushel.


"Corn prices are firmly in the grips of a bear market as excellent weather conditions continue to add to confidence in that the US will see a bumper crop," Sterling Smith of Citigroup, said.


"Demand looks to weaken this year as China looks to have a very big Corn crop of its own and Europe will probably use more Wheat instead of Corn," suggests Jack Scoville of PRICE Futures Group.


Analysts noted "nearly ideal" conditions for the pollination period for the US corn crop, and could see prices extend lower towards $3.25 a bushel "if pollination goes off without a hitch," suggest Citigroup.


Soy treads water ahead of Wasde

In contrast to the other grain markets soybeans appeared relatively robust with trade largely dominated by ongoing position rolls by commodity index positions.


Soybean September futures stood up 1.3% at the close compared with a 0.6% gain in November futures, which settled at $10.84 3/4 a bushel in Chicago.


The soy complex will look to the first USDA production reports next week to gauge yield and production estimates while rains in the mina soybean growing regions in the US continue to "improve moisture" according to forecasters.


Coffee extend fall, sugar supported


The soft complex posted a somewhat more mixed day as modest gains by cotton and sugar bucked further slippage in Arabica coffee as September futures finished down a further 1.6% at 181.00 cents a pound.


Chartists at Sucden Financial believe "Short-term indicators suggest the potential for further downside momentum in the market with possible declines to falter near the 40-day MA," located at 177.13 cents a pound.


Raw sugar futures in New York finished with a modest 0.6% gain, settling at 16.14 cents a pound as "The 16 cent area (October) is proving a tough level to breach," suggests Nick Penney, Senior Trader at Sucden Financial.


Mr Penney cautioned should physical buying, "not materialize and further shorts enter the market, 15.50 will be the next battleground".


December cocoa closed unchanged at $3,212 a tonne.



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