Happy days returned for some
investors, as Wall Street's S&P 500 share
index touched 1,500 for the first time in more than five years.
And this despite the
poorly-received Apple results which sent its shares down 12.0% in late trading.
The spur to a higher day on
Western share markets, with London stocks close up 1.1%, and Paris shares up
0.7%, was in part upbeat Chinese manufacturing data overnight, the strongest
for two years, but also well-received US unemployment data.
The number of Americans claiming
unemployment insurance for the first time dropped by 5,000 in the week to
January 19 to a seasonally-adjusted 330,000 – the lowest figure since January
Cotton stiches up bears
Some of this fed through into
Cotton, an industrial
raw material at times moves in far closer correlation with shares than food crops,
extended its winning run to seven sessions by adding 3.0% to end at a six-month
closing high of 82.89 cents a pound in New York, for March delivery.
The rise was helped again by
technical factors, with the lot painting over a gap in the continuous chart
dating back to June last year.
Rabobank followed Standard Chartered
in offering soothing words on cotton futures but failing to offer the
reassurance of an upgrade to price expectations.
Rabo, a big agricultural lender,
highlighted the prospect of a steep drop in world cotton sowings this year,
while Chinese imports remain relatively high, although the December lot it
preferred actually underperformed, easing 0.1% to 79.73 cents a pound.
Battle for acres?
The extent of cotton's gains, now
9% during its winning run, was even noted on the grain markets, where Kansas-based
broker Country Futures flagged the "significant rally", attributing it in part
to the opening salvos of the battle to win area in farmers' spring planting
"The talk of large US soybean
acres has pushed new crop cotton upward," Country Futures Darrell Holaday said.
"This the first move in the market
to begin to compete for US acres this spring."
But then there was little enough
among grain and oilseeds to garner bullish attention until late deals when Chicago's
big three crops – corn, soybeans and wheat – pared losses.
'Bit of a bounce'
Corn actually managed
to close in positive territory, adding 0.5% to $7.24 ¼ a bushel in Chicago
for March delivery, an outcome which had looked unlikely for most of the day,
and meant regaining its 10- and 50-day moving averages.
One factor in its favour was ideas of a rise in placements
of cattle on feedlot last month, despite negative margins among feeders, and
questioning again the degree of feed rationing going on.
(The US Department of Agriculture's monthly Cattle on Feed
report will be released after the close of markets on Friday.)
However, there was some relief over US ethanol production data
too, which showed some recovery, rising 8,00 barrels a day to 792,000 barrels a
day, implying more of the grain being used in making biofuels.
"It's a bit of a bounce, and probably explains why corn bounced
back a little bit," Don Roose, president of broker US Commodities, told
While hardly a mammoth recovery, remaining still among the
lowest levels on records going back to 2010, it countered some of the negative
talk around about rationing of ethanol production by current corn values.
Richard Feltes, at RJ O'Brien, said he was "picking up
market chatter that some analysts are considering dropping their 2012-13 US
ethanol use for corn number to 150m-250m bushels below the USDA's 4.5bn-bushel
There has been market talk of approaching 20% of US ethanol capacity
out of production, with Abengoa Bioenergy, for instance, last week saying it
would temporarily halt ethanol output at two plants in Nebraska.
Furthermore, Thursday's data showed inventories declining by
278,000 barrels, to 20.1m barrels, a bigger drop than the market had expected.
'The fundamental tie-breaker'
relatively well too in limiting their losses to 0.1%, to $14.35 ¼ a
bushel for Chicago's March contract, when ideas of rain for dry areas of Argentina
and southern Brazil appeared to have given bears the upper hand.
"The fundamental tie-breaker," as the contract headed to a
low of $14.15 a bushel earlier on, "was the change to a wetter forecast in southern
Brazil and Argentina," US Commodities said.
"A front moved through these regions overnight – 0.25-0.5 inches
of rain occurred over about 50% of the area," the broker said, adding that "southern
Brazil has a wetter forecast in the 11-15 day maps".
At Allendale, Paul Georgy said
that Argentine forecasts "now have 50% of the growing area getting rain
with a few short spells of heat flare-up.
"Traders struggle to find new bullish news to drive markets
And especially when reports from the early harvest in Brazil
are showing better progress, and OK yields.
'Trade is nervous'
Still, one factor in soybeans' favour is the Brazilian
logistical hiccups, which may yet hamper efforts by buyers to get hold of
long-awaited supplies of the oilseed from South America, and find an
alternative to high-priced US supplies.
Agroconsult, after all, has warned of vessels waiting 45
days from next month to load up.
Rory Deverell, at broker FCStone said: "The trade is nervous of Brazilian capacity to logistically move enough
soybeans to save the US balance sheet."
That said, "if they do then we should
prepare ourselves for a tsunami of cancellations of US soybean loadings and
pressure on Chicago futures".
'Crush margins are positive'
In fact, there was the opposite on Thursday, with Chinese
buyers showed they were not taking any changes, and buying 510,000 tonnes of US
soybeans, albeit for 2013-14 delivery.
The USDA announced a further 113,000 in export sales on top,
to "unknown destinations", also of new crop.
"Crush margins are positive in
China all the way through the end of the year and importers are looking for opportunity
to lock those margins in place," Country Futures' Darrell Holaday said.
Rain on the Plains
Wheat also managed to pare its
losses, but still ended down 0.6% at $7.68 ½ a bushel in Chicago, for
March delivery, amid ideas of some moisture for drought-pressed winter wheat
"The US hard red winter wheat area
will see some moisture this weekend," Mr Holaday said, if adding that there
would not be a large amount of rain, and that a "system next week now does not
look very promising".
Still, hard red winter wheat
itself for March dropped 1.1% to $8.12 ½ a bushel in Kansas.
Paris wheat did worse still, dropping 1.9% to E246.75 a
tonne, after European export data showed licences for shipping a modest 364,000
tonnes of the grain this week.
'Another leg down'
Back among soft commodities, New
York arabica coffee for March did
even worse than Paris wheat, dropping 2.6% to 146.55 cents a pound, pretty near
its day low.
"New York coffee has done today
what it looked like it was threatening to do yesterday and had another leg
down," Sucden Financial said.
"Trading was not quite as dramatic
as earlier on in the week. But the 149.40-cents-a pound level served as
relatively weak support, and once the US markets opened in the afternoon this was
Latest reports from Brazil, the
top arabica producing country, show benign weather not only boosting production
potential of some crops, but enabling it to come from only one flowering, making
it easier to harvest, and boosting consistency of bean quality.