Remember when Bob Dylan shocked the folk music world by
swapping his acoustic guitar for an electric one at the Newport Folk Festival?
If you can, you were around the last time corn managed a
losing streak as long as this one looks like turning out to be.
With an hour's trading to go, Chicago's March contract had
lost its early resilience to stand 0.7% lower at $6.90 ¾ a bushel, on track for
a 10th successive day of losses, matching a decline of June 2007, the
longest since July 1965.
Yet again, investors who thought corn's losing streak could
not go on any longer, perhaps those who entered the market after Mr Dylan's Bringing it all back home, were caught
"Every day people pick the bottom, then when it does not go
up, end up having to puke their position back out again," said Jerrod Kitt at Linn
Group, the Chicago-based broker.
The improvement in South American weather had a step change in
undermining bullish sentiment.
"Two weeks ago, the prospects for South America were
somewhat threatening. The rains we have had since have been very important for
Argentina," Mr Kitt said.
'Aversion to the complex'
And as for ideas of funds calling time on the selling wave
seen at the heart of corn's price decline - ideas which gained traction after
they were viewed as neutral in the last session, after selling 19,000 lots over
Monday and Tuesday – well, it did appear there still something "structural"
going on, he added.
"We are seeing some aversion to the commodities complex by
some of the funds," and in particular the agricultural space – as highlighted
by Barclays's withdrawal on Wednesday from servicing hedge funds in crop
Furthermore, selling was to some extent begetting more
selling, in meaning fund ag positions "violate risk parameters, and that means
they have to sell" yet more.
'Due for rally'
OK, there were still those cautioning over the potential for
corn to bounce, if investors find cause to close their newly-fashionable short
"The market is now oversold. If a positive catalyst develops
the market is due for a short covering rally," US Commodities said.
One catalyst for a rebound could be a turn back for the
worse in South American weather, if, for example, precipitation forecast for Argentina
"The rain event this weekend will be key. The forecast in
Argentina has 70-75% coverage of 0.5-1.5 inches with locally 3 inches," US
"If forecasters miss the wet forecasts it will be a big deal
for Monday night's trade."
List of bear points
And the ethanol market continued to offer fundamental cause
for some bullish cheer, with Valero confirming that it had restarted a Nebraska
plant which had been mothballed in June because of low margins.
But the export picture was a little clouded, with US export
sales at 285,000 tonnes for last week, the best for four weeks, but still below
some forecasts, and hardly much to write home about.
Furthermore, the dollar
strengthened 0.5%, reducing the competitiveness of dollar-denominated exports including
corn and many other agricultural commodities.
And there are the ideas of improved rain in parts of the US
to factor in.
Indeed, Darrell Holaday at Country Futures reminded that "overall
sentiment has turned bearish as the industry continues to point to increased
moisture in the Corn Belt, poor corn exports, 100m planted acres of corn in the
US and a yield of 160 bushels per acre or higher.
"That sentiment is primarily based on the improved moisture
levels in the central and eastern Corn Belt areas."
The ideas over improved US moisture have actually been more
damaging for wheat, for which ideas of drought damage to the US winter crop
have been a major price support.
Indeed, WxRisk.com flagged the prospect of "good rains for
the lower Plains" early next week, as a cold front hits. (Indeed, much precipitation
might fall as snow, rather than rain.)
"Right now the weather model show enough cold air will be in
place so that this system could bring significant snow to much of eastern Colorado,
the northern half of Oklahoma, all of Kansas, all of Nebraska, eastern South Dakota,
Minnesota, Missouri, Iowa, Wisconsin, Illinois, Indiana, Michigan and Ohio,"
the weather service said.
That took the stuffing out of decent weekly US export sales
data, of 651,000 tonnes, twice some estimates, to send Chicago wheat down 1.1%
to $7.27 ¼ a bushel.
'Crush margins are
Soybeans' weekly export sales data, by contrast, were deemed
poor, at 234,000 tonnes, well below market expectations.
The figure reflected hefty cancellations by China of previous
orders, a trend which put the dampeners on hopes of huge orders when the
country returns next week from lunar new year holidays.
"The Chinese crush margins are positive and many in the
trade are expecting them to be looking for more soybeans next week," Paul
Georgy at Allendale said, shortly ahead of the release of the export sales data.
'Once again slow
It also cancelled out some of the uplift from talk of lengthening
queues of importers waiting to get hold of Brazilian supplies, which have been
held up by a rain-delayed start to harvest.
"Load out time in Brazilian ports continues to build as last
week there were 84 vessels waiting. This week the number is 115," Mr Georgy
There is the potential for that number to get longer too,
with rains set to return to north western crop areas next week.
"The upturn in rains in north western areas next week will
once again slow harvesting," Don Keeney at weather service MDA said.
Soybeans for March stood 0.6% lower at $14.14 ¼ a bushel.