So corn did
manage to end its (joint) longest losing streak in 48 years.
Chicago's March contract closed higher for the first time
this month, after a 10-day losing run.
But the 0.6% rebound was hardly the "correction" that many investors
had been talking about – more of an "adjustment" compared with the loss of more
than 6% the contract had notched up during its losing streak.
Signally, the rise, to $6.98 ¾ a bushel, left the contract
below the psychologically important $7-a-bushel mark, giving bears some hope
that the session represented just an interruption of the grain's downward
'Major rain event'
And there were some other reasons to downplay the rally,
with much talk that it was fuelled by the prospect of a long weekend ahead in
the US (where markets are closed on Monday for President's Day), encouraging
investors to take profits on short positions.
After all, the downward pressure has come largely from ideas
of improved weather in South American, notably rain for Argentina.
"The forecast is for Argentina to receive 70% coverage of
0.5-1.5 inches of rain over the next five days. This is a major rain event," US
But rains can disappoint, and weather forecasts can always
Cash market vs
Still, it should also be noted that corn's headway looks
more impressive when compared with that for other risk assets.
Shares had a soft
day, amid reviving concerns over the health of eurozone and UK economies, while
the average commodity, as measured by the CRB
index, lost 0.4%.
Furthermore, the negative moves in Chicago have not been
represented fully in the US cash market, which has shown itself fonder of
higher corn prices.
"The cash market for corn continues to be very strong,"
Darrell Holaday at Country Futures said.
"The story remains the same - when corn slides, the basis
Mr Holaday added: "The market is trying to ration domestic
supplies. We are headed to a record low March 1 corn stocks number."
And that was a theme taken up too by Rabobank which, with
Standard Chartered, forecast brighter times for corn futures than investors are
Corn's outlook was "still fundamentally bullish", Rabobank
'Very good for wheat'
For fellow grain wheat, supplies are not so tight, a big
reason why the grain's premium to corn has narrowed to abnormally low levels.
Still, the grain did its best on Friday to rebuild a premium,
adding 1.4% to $7.42 ¼ a bushel – although in wheat, more than corn, position-covering
should be investigated as a rationale, given the hefty short that speculators
have in Chicago futures and options.
The grain also has its own weather story going on, in the
prospect of rain for dry areas of the Plains, where winter wheat seedlings have
been grappling with drought.
"Wheat continues to be pressured by the outlook for moisture
in the middle of next week," Mr Hoalday said, noting that latest weather models
"added moisture in and moved it further south.
"If this occurs, it would be very good for the hard red
winter wheat and some critical grass areas."
'Emerge from the funk'
However, "the problem is that it is still five days out", creating
a margin for error.
Furthermore, investors were encouraged into a more positive
view of wheat by talk of further US export sales, adding to the upbeat picture
painted on Thursday by data showing US export sales of 706,000 tonnes.
"Rumours of US wheat business into China and Brazil have
helped the oversold wheat markets emerge from their current funk," Benson Quinn
Whatever, the better US performance helped Paris wheat end
higher too, by 0.7% at E244.25 a tonne for March delivery, while London wheat
for May gained 1.5% to £206.75 a tonne.
That was more than Chicago soybeans managed, in closing up 0.5% at $14.24 ½ a bushel for March
Still, even that might be considered a strong performance,
given two setbacks – the first being the cancellation of a 250,000-tonne export
order for US soybeans, for 2012-13.
And this the day after data showed cancellations of some
385,000 tonnes of export orders last week (partly offset by new business).
The performance appears to bear out ideas of US export
business hitting a wall as South American supplies come online.
The second setback was US crush data for January which, at 158.195m
bushels, were the highest for the month in three years, but below market
expectations for a figure some 1.3m tonnes higher.
'Lean towards India'
Among soft commodities, New York arabica coffee failed to find the succour that Chicago corn did,
and continued its downward run, closing down 0.4% at 140.20 cents a pound for May
delivery, the lowest finish for a nearest-but-one contract since June 2010.
The bean is being sunk by improved ideas on Brazil's crop,
following a turn better in the weather.
But New York raw
sugar staged a bounce from its own two-year low, adding 0.3% to 18.00 cents
a pound for March delivery.
"The news around the market has started to lean towards
India and conjecture on revisions of their potential to add to the global
surplus," Thomas Kujawa at Sucden Financial said.
In fact, there are concerns that India could be at the start
of a downswing in its cycle, as high cane prices and depressed sugar prices
squeeze mills, forcing them into cutbacks or payment deferrals.