It wasn't the easiest day for risk assets to rally, with the
talks between Republican and Democrat politicians over the US budget looking
increasingly likely to go down to the wire.
Shares eased a
touch on Wall Street, while the CRB commodities index stood down 0.3% in late
deals, little helped by a rise of 0.3% in the safe haven of the dollar.
Strength in the dollar makes commodities priced in the
greenback more expensive for investors buying with other currencies.
However, Chicago oats
managed it, soaring 4.4% to $3.31 a bushel for December delivery.
The grain is often considered a leading indicator, with the
adage "oats knows", and rough rice
was certainly on the upswing too, gaining 2.1% to $15.48 a hundredweight for
But among the big grains, only corn seemed to have noticed the rise in oats, and managed a 1.5%
rise to $4.43 ½ a bushel in Chicago for December delivery, as investors took
profits on some of their significant short positions.
Not that all the fundamental news on the grain is rosy, with
the US harvest continuing to report strong yields, and talk of US stocks ending
at more than 2bn bushels commonplace.
"Overall, the long-term bearish trend looks to continue,"
CHS Hedging said.
But not for now, in part thanks to the US rains which have
reduced a little the weight on prices from the seasonal spike in supplies.
There is hope for demand too, despite actual US exports last
week easing to 21.7m bushels, from 25.4m bushels the week before.
"There is growing optimism about the amount of exports that
will be announced when the government opens back up," from its partial shutdown
forced by the US budget impasse, Darrell Holaday at Country Futures said,
flagging "thoughts that US export sales have been very good since October 1".
Benson Quinn Commodities said noted rumours that China is "continuing
to shop the US for corn, a potential sign that current prices have value".
'Starting to raise
Indeed, "US corn is now much closer to world values," US
Commodities said, highlighting that values of rival Black Sea supplies are
being supported by a rain-delayed harvest.
"Producers in the Black Sea region remain slower sellers."
Growing US competitiveness on export markets "should help support
December corn near $4.25 a bushel", the broker said, adding that, after all, in
China, a growing importer, "corn values are near $8 a bushel".
And, an extra bullish consideration, dryness in not the only
fear for the South American crop currently being sown.
"Rumours that farmers are going to spend less money on
fertilizer are starting to raise concern over what the average yield numbers
will be if they do spend less money," CHS Hedging said.
Corn vs wheat
Furthermore, there were technical considerations to take
into account, one from the charts.
"The technical structure in the corn market did firm up ever
so slightly with higher trade today, potentially confirming the outside
reversal day higher posted yesterday," Benson Quinn Commodities said.
Another was the fuel to corn's rise from the unwinding of
short corn, long wheat spreads which
have been a profitable bet until lately, and which having topped $4.50 a
bushel, are now the subject of profit-taking.
"There is some unwinding of the wheat/corn spreads which
have put in place over the last two months," Country Futures' Mr Holaday said.
'Wheat on the
And, indeed, Chicago wheat for December ended down 1.0% at
$6.85 ¾ a bushel, with investors highlighting the strong prospects for nicely-watered
US winter grain sowings, which stand in contrast to the former Soviet Union,
where rains have been too long and too strong.
"Another round of rain this week in the US hard red winter
wheat area has put the wheat on the defensive so far today," Mr Holaday said.
CHS Hedging said: "Wheat is feeling pressure from winter
wheat acres getting a drink," adding that crops were "welcoming the moisture".
More competitive on
Not that the worries about the former Soviet Union seedings
have gone away.
"There is now more talk about [the region's farmers] abandoning
winter wheat acres and planting them to corn or oilseeds next spring," Mr Holaday
And there is reason to uphold ideas of strong demand for US
wheat given that, according to Richard Feltes at RJ O'Brien, "the discount of
Black Sea and EU wheat versus US continues to narrow," and this at a time when "US
farm sales of soft red winter wheat are drying up as the producer concentrates
on row crop harvest".
In fact, US weekly wheat exports, as measured by cargo
inspections, fell to 25.3m bushels from 29.8m bushels, a decline which, coupled
with US sowing progress and concerns over technicals, was enough to keep a lid
Soybeans declined too, although less so, dropping 0.5% to
$12.67 a bushel for November despite, on the face of it, plenty of reasons for
bulls to gain the upper hand.
US weekly soybean export sales were strong, at 47.4m bushels,
up from the 30.7m bushels the previous week.
And exports look like keeping on coming.
"Soybean traders need to respect ideas that China may have
secured as much as 2m tonnes of US soybeans in the last couple of weeks," Benson
Quinn Commodities said.
Furthermore, US domestic demand has held up better than had
been thought in the face of tight supplies, with the September crush pegged by
the National Oilseed Processors Association at 108.7m bushels.
While 1.6% down from the August volume, the figure was 2m
bushels above market expectations.
Additionally, "global demand for soymeal remains strong, domestic crush margins are quite good and harvest
interruptions have put some pressure on the soybean pipeline," Benson Quinn
However, "a generally weaker tone continues to develop as
the technical structure of the market isn't offering much, if any, support and
harvest reports continue to offer plenty of optimism toward future supplies,"
the broker added.
Among soft commodities, New York raw sugar for March dropped 1.8% from a nine-month closing high to the
last session, to end at 18.70 cents a pound, on a decline fuelled by
profit-taking, with talk of producer pricing too at levels below those at 16
cents a pound, and even below, seen during the summer.
"We must be cautious, as the relative strength indexes are
in well overbought territory," at a reading for the much-watched momentum
indicator of 81.4 on the nine-day timescale, and 76.2 for the 14-day, Sucden
Commerzbank said that, while rains may be slowing cane
harvest progress in Brazil's key Centre South region for now, "rainfall is
nonetheless improving the growing conditions for the crop to be harvested from
"This suggests that we will see lower sugar prices in the
medium term and a more pronounced backwardation of the forward curve."
Raw sugar for October 2014 indeed fell a little less
steeply, down 1.5% to 18.71 cents a pound to gain a small premium over the