Grain markets returned to the front foot, as the one-way
talk about lower prices ahead turned into more of a debate, but the mood in
soft commodities was more muted.
December corn futures, having traded lower for nine successive
sessions up to Friday, produced their second up day in three so far this week, adding
1.3% to $3.86 ¾ a bushel.
It also avoided setting an intraday contract low for the
first time this month.
The old crop September contract gained 1.1% to $3.78 ¼ a
It was not that there was a huge improvement in the fundamental
news, although changes in the weather forecast, while for the better in terms
of adding wetness to the Midwest outlook, were unsettling in their
The midday run of the GFS model "moved more in the direction
of the EU model, with cooler temperatures and more moisture in the Plains and
Midwest", said Darrell Holaday at Country Futures.
"Given the sharp sell-off of the last three weeks, this
uncertainty around the weather forecast has prompted additional short-covering."
What was different is a growing pressure that prices may
have reached some kind of value levels, an idea that gained some traction on
talk of a succession of grain and oilseed import orders.
In corn, the US Department of Agriculture announced the export
sale of 210,448 tonnes to "unknown destinations" for 2014-15 delivery.
A group of Israeli buyers also bought 108,000 tonnes of corn,
plus 50,000 tonnes of feed wheat, although deemed likely sourced from the Black
The USDA also announced the sale of 120,000 tonnes of US soybeans
to China for 2013-14 delivery, plus 240,000 tonnes to "unknown destinations"
There was other export activity in wheat too, with Algeria's
state grains agency, OAIC, buying 810,000 tonnes of the grain, probably of French
origin, for $268-269.50 a tonne and tendering for barley too.
'Markets are basing'
Sticking on demand, weekly US ethanol data were helpful for
prices too, showing production up 16,000 barrels a day at an elevated 943,000
barrels a day last week, while stocks fell 341,000 barrels to 17.95m barrels.
And there was the technical point, highlighted earlier, that
corn prices often find a range between mid-July and mid-August.
It all gave some weight to ideas that losses may not be so
easy to come by, with Commerzbank on Wednesday forecasting resilience in
soybeans, and some recoveries ahead for Chicago corn and wheat futures (but not
Richard Feltes at RJ O'Brien said: "Ag markets are basing
short term. It may take confirmation of the next soaking rain to punch out new price
Benson Quinn Commodities said: "Markets remain oversold and
are hinting at forming a consolidation range."
'Trend is still
Not, it has to be said, that there are thoughts of price
recoveries proving that dramatic, and plenty of bearish talk remains.
"The trend is still solidly down," Country Futures' Darrell
"Why the bounce in grains? The answer is that they have
moved straight down for 3 weeks and markets dont move straight up or down
Citigroup's Sterling Smith said that "while the market, for
the moment, may have overshot to the downside and may be able to garner some
support", price strength "is transitory and can evaporate as quickly as it
After all farmers are behind on crop sales, meaning that "the
market should find increasing resistance as prices move higher".
Still, there was enough buying around to return November soybeans
back above $11.00 a bushel, to $11.02 a bushel, a gain of 1.5%.
Earlier, the contract hit $11.07 ¾ a bushel, close to its
10-day moving average, putting back on the agenda a group of chart signals that
have been irrelevant as prices have ploughed further and further below the main
Markets appeared intrigued by the further purchase of
old-crop soybeans by China, with talk that the cargoes had been switched from
South American origin, potentially an indication that US prices are punching
hard in competitiveness terms.
But after the soft US crush data on Tuesday, and the bearish
changes on Friday to the USDA's estimates for the domestic balance sheet in 2013-14,
the boost to the old crop August lot was limited, with it ending up 0.6% at
$11.87 ¼ a bushel.
Nonetheless, the laggard was actually wheat, which for September delivery nudged only 0.25 cents higher
to $5.38 a bushel, despite Commerzbank's idea that prices of $6.00 a bushel lie
US export news for the grain is not so enthralling than for
corn and soybeans, with France apparently scooping the Algeria order, for
instance, (as might be expected, given proximity and historical ties) and
Russia fighting hard to win an Iraqi tender.
Furthermore, Russia looks like having more to sell than initially
expected, with Russia's agriculture ministry lifting by 3m tonnes to 100m tonnes,
or more, its forecast for the country's grains harvest this year.
While farm ministry estimates are taken by markets with a
pinch of salt, respected consultancies upgraded their forecasts too.
Ikar raised its estimate by 2m tonnes to 98m tonnes, while SovEcon
upgraded its forecast to 92m-93m tonnes, from about 89m tonnes.
So far, Russian farmers have harvested 20.1m tonnes of
grains, bunker weight, from 12% of planted area, at a yield of 3.55 tonnes per
hectare, according to farm ministry data.
At year ago, growers had reaped 25.3m tonnes of grains at
yields of 3.08 tonnes per hectare.
Milling vs feed
Wheat fared better in Paris, adding 1.1% to E179.00 a tonne
for November delivery, amid continued concerns over the impact of late rains on
the quality, if not quantity, of the European Union harvest.
"There is still some chatter about the slow pace of harvest
progress in northern EU as wet conditions have caused delays," Minneapolis-based
Benson Quinn Commodities said.
"The bigger issue would be wet conditions continuing and
potential quality issues."
Agritel on Tuesday noted that "operators remain worried
about crop quality because of latest rains registered around France and
"Indeed, germinated wheat and barley are signalled on
several production areas."
It was notable that prices of feed wheat, which might become
more plentiful if rain causes downgrades, added a more modest 0.3% to £129.25 a
tonne in London.
'Reports of poor
Among soft commodities, arabica
coffee futures recovered 0.3% to 162.50 cents a pound for September
delivery, putting a little further ground between them and the intraday low of 159.25
cents a pound, the weakest in nearly five months, reached in the last session.
"Reports of poor production continue to arrive with
regularity from major Brazilian production areas," Sterling Smith at Citigroup
That said "the lack of a frost threat and agreeable harvest
weather is keeping the bulls under pressure".
An extra factor in their favour was a downgrade of some
23,000 tonnes to 195,000 tonnes in the estimate for the Peruvian harvest, with
the cut attributed to losses to the roya fungus.
'Talk of bigger
At Price Futures Group, Jack Scoville flagged "talk of
bigger Colombian offers this year as trees replanted over the last couple of
years start to produce.
However, "roasters seem more interested in buying, and they
might have to keep buying more from Brazil or Colombia as robusta offers
overall seem down right now", after a poor Indonesian crop.
Nonetheless, robusta coffee for September traded down 0.6%
at $2,009 a tonne in London.
But that was better that London cocoa, which ended down 0.9% at £1,912 a tonne for September
delivery, while its New York peer lost 1.4% to $3,062 a tonne.
Prices were undermined by Hershey's announcement of price
rises, a factor seen triggering similar increases by rivals, and curtailing
growth in cocoa demand.