Sessions ahead of weekends often see a bout of
profit-taking, there being two days when investors are unable to trade.
And that seemed something of a theme this Friday, with the
renewed predominance of funds in agricultural commodity markets, and the
prospect of a key US Department of Agriculture Wasde crop report ahead, seen as
"We would not be surprised to see some profit-taking as the
day winds down ahead of the weekend and with the USDA report out Monday," Benson
Quinn Commodities said.
That looked the case for New York raw sugar and Chicago corn
'Weather has improved'
Raw sugar for May closed down 1.7% at 18.01 cents a pound, amid
ideas that rains could bring something of a recovery to cane crops in Brazil's
Centre South region which have been tested by drought.
"Weather has improved in sugar areas as some showers could
continue into the weekend," Jack Scoville at Price Futures Group said.
"Rains now could help the crop recoup some of the losses if
there is enough rain."
At Sucden Financial, senior trader Nick Penney said that "the
market is still concerned with weather in Centre South Brazil and reports of
expected heavy rain by Somar weather services in some areas of Sao Paulo and
Minas Gerais states - up to 100 mm in some areas - going into the weekend".
Big range of
also affected by Brazil's drought, did better, closing up 0.7% at 196.85 cents
a pound for May delivery.
But coffee trees look more susceptible than cane to
irreversible damage from drought.
Indeed, analysts believe Brazilian production, which had
been pegged closed to 60m bags a couple of months ago, could come in as low as
39.0m bags a Reuters survey showed, although there was an estimate as high as
56.0m bags too.
'Black Sea tensions'
In Chicago, it was corn that got hit by profit-taking, with the
May contract closing down 0.4% at $4.89 a bushel – and this after hitting $5 a
bushel earlier, for the first time for a nearest-but-one contract since August.
Sure, the Ukraine crisis continues to offer some support for
corn, and wheat, bulls, with the country a major exporter of both grains.
"Overnight grains rallied on Black Sea tensions and
continued demand," CHS Hedging said.
Darrell Holaday at Country Futures said: "The situation in
Ukraine continues for provide a level of uncertainty that is supportive for
corn and wheat."
However, the "problem with the Ukraine situation is that it
is very difficult to find any difference in the situation today compared to 24
'How much is dialled
And while investors were impressed by US corn export sales
unveiled on Thursday, the question, as Don Roose president at US Commodities
said, is "how much is already dialled in to prices?
"There are still ample supplies of corn in the US," Mr Roose
Besides, funds now have a substantial net long position in
corn, meaning this week's rising prices have delivered profits to take.
'Supported by drought'
Wheat did better,
in part because funds have yet to build a huge net long position in Chicago futures
and options. (Regulatory data later will reveal their actual position.)
That left less temptation to take profits. But there are
also concerns over the impact of cold on US supplies.
"Wheat exports were also good and the recent rally has been
supported by drought in the US southern Plains raising concerns over the
condition of the winter wheat crop," US Commodities said.
The US weather outlook implies that "Texas and Oklahoma winter
wheat crop ratings likely decline further into month end", Richard Feltes at RJ
Wheat for May ended 1.2 % higher at $6.54 a bushel.
If there was a surprise, it was that soybeans managed to extend their headway too, closing up 1.4% at
$14.57 ¾ a bushel for May delivery, despite concerns over the extent of Chinese
"China is now bloated with soybeans. The soymeal basis levels in China are in
retreat and ships are backed up to unload soybeans," US Commodities said.
Country Futures' Darrell Holaday also highlighted "weakness
in the soybean complex in China.
"Soymeal values continue to work lower and crushing margins
continue to be poor.
"There are even reports of a shortage of storage facilities
to store soymeal as the feed demand continues to collapse."
Soymeal itself for May closed up 1.5% in Chicago at $457.80
a short ton. But can the gains stick on Monday?