As a rule of thumb, changes in market trends, caused by the
likes of surprise data, take three days to work through, traders say.
It was a measure of the headwinds facing corn bulls that its price revival only
last two days.
Tuesday, the third session since Friday's US Department of
Agriculture inventory estimate shock sent corn prices soaring 5%, witnessed a
Chicago's March contract ended down 0.7% at $4.31 ½ a
The fall came amid further downbeat talk on prospects for
crop prices overall, from the likes of banking giant Deutsche Bank and boutique
However, the negative sentiment appears focused on corn,
given that even the latest USDA estimate for US stocks at the close of 2013-14
implies a near-doubling over the season, and amid ideas of sluggish growth in
demand for the grain for use in making ethanol.
Furthermore, there is persistent talk that growers are ramping
up sales, now that the new tax year has begun.
"Farmer selling has corn futures down for the first time in
three sessions," CHS Hedging said.
'Talk of additional
Also ranged against the grain was talk of fresh Chinese rejections
of US cargoes of distillers' grains (DDGs), the byproduct of corn ethanol used
as a livestock feed, on grounds of containing traces of a GMO corn variety unapproved
While it had appeared that this threat had passed, "there is
talk of additional rejections of US DDGs in China, which adds to the defensive tone",
Benson Quinn Commodities said.
At least for bulls' sake Chicago's March corn contract
retained some positive technical indicators, closing above its 50-day moving
average for a third successive session, for the first time in nearly eight months.
There was more talk of deteriorating Argentine weather
conditions too, with CHS Hedging noting that the "10-day forecast shows that
the dryness in southern Argentina has no sign of letting up.
"The latest weather update predicts at least six days will
top out near 100 degree-Fahrenheit temperatures and no rain.
"All this occurring at the key pollination stage for much of
the region's corn crop."
US Commodities said: "The South American forecast has 6 days
of 100+ degrees in the southern one-third of Argentina's [grain] belt.
"One-half of the Argentine corn crop could see heat stress
during this time frame."
At RJ O'Brien, Richard Feltes said that the "weather leans
positive" for prices, with "upcoming Argentine temperatures even hotter than
yesterday, and not much relief from showers next week.
"The 11-to-15 day outlook across Argentina looks warm as
However, it was soybeans which managed to gain some succour
from the forecast, closing up 1.0% at $13.07 a bushel for March delivery.
"The weather models are still providing some support to the
soybean complex as the market would like to see more rain and milder
temperatures in central Argentina," Darrell Holaday at Country Futures said.
The strong performance by US exports also continued to
support the oilseed although, unusually by recent standards, no export sales
were announced by the USDA through it daily alert system.
"Sales of beans to 'unknown', or to China, are continuing to
fuel the bulls until we see some cancellations," Paul Georgy, president at broker
Certainly, it helped ease the concerns at upgrades for
Brazilian soybean harvest estimates by oilseeds industry group Abiove, which
raised its estimate by 1.0m tonnes to 87.6m tonnes, and by Agroconsult, which
lifted its forecast by 900,000 tonnes to 91.6m tonnes.
(The USDA, whose data set global benchmarks, pegs the
harvest at 89.0m tonnes.)
And technically, the March contract regained its 100-day and
20-day moving averages, to close above all its major lines.
Wheat added 1.0%
too, to $5.79 ¼ a bushel in Chicago for March, regaining some of the premium
over corn surrendered on Friday.
In fact, hard red winter wheat, as traded in Kansas City,
was the focus for bulls, with the March contract bouncing from an eight-month
low (for a spot lot) of $6.17 a bushel set early in the session to end at $6.31
a bushel, a gain of 2.0%.
The contract received support from two factors, the first being
the slow release by Argentina of the 1.5m tonnes of exports it has permitted,
with only 500,000 tonnes up for grabs for now.
Allendale said: "This not what Brazil wanted to hear," being
an importer of largely hard red winter wheat, and typically from its neighbour.
The dearth of Argentine supplies mean Brazil looks likely to
continue to turn to the US for imports, and indeed, there is persistent talk of
further purchases on this route.
"Cash traders expect additional Brazil buying of US hard red
winter wheat in come weeks."
And dryness in the US Plains, hard red winter wheat country, is "prompting some buying", Country Futures' Darrell Holaday said.
"The GFS weather model for the US Plains continues to point to 10 days of completely dry conditions and warmer-than-normal temperatures," not what is needed when there is still plenty of time for frost damage.
Technically, the session offered a key reversal too, with
the March contract trading outside the bounds of the previous session and
That was not the case with Paris wheat, which ended
unchanged at E192.00 a tonne for March delivery, matching a three-month closing
'Everyone is so
Among soft commodities, arabica
coffee, which has like corn staged a little-touted recovery, like corn saw
its revival fade, ending down 0.5% at 119.20 cents a pound in New York for
Technically, "short-term, we expect further consolidation
within the recent range with potential for modest gains toward the 125.71-cents-a-pound
area", Sucden Financial said.
And raw sugar for March dropped too, by 0.7% to 15.49 cents
a pound after industry group Unica revealed a relatively firm end to 2013 for
production in Brazil's key Centre South district.
The decline left the contract within an ace of a fresh
three-year closing low.
In fact, "what may be supportive [for prices] is rather the
fact that everyone is so bearish," Sucden said.
"Technically the markets are oversold and a corrective rally
is possible, although the feeling is that producers are lying in wait to sell
into anything above 16 cents a pound."