Turnaround Tuesday? It turned out to be more a twisted and tangled one.
The idea of the session proving a positive one, reversing a
strong tendency in the last session as often happens by lore in Chicago on the second
day of the week, was replaced by swings between positive and negative ground which
looked like ending in bears' favour – until a revival in the dying deals.
which had stood more than 1% lower with minutes of trading to go, recovered to close
down a modest 0.5% at $8.86 ½ a bushel, with corn showing a small revival to recoup nearly all its losses, and soybeans nudging higher to settle in
Russian prices soar
Did investors get a sniff of the Egyptian wheat tender announced
after Chicago closed?
After all, US grain looks to have a better chance in this
one than previous tenders from the world's top wheat-importing country, given
the retreat of Russia from the scene.
FCStone noted the "lack of former Soviet Union offers from
November onwards" in wheat, an observation echoed by rival broker US Commodities
which said that "wheat supplies continue to shrink in the Black Sea region.
"Very limited exportable supplies remain in the Ukraine. Nothing
is being offered out of Russian currently."
In fact, the drought hit to the Russian harvest has sent
prices of export-grade wheat to $340 a tonne – the highest since the collapse
of the Soviet Union more than two decades ago, according to Ikar, the Moscow-based
Institute for Agricultural Market Studies.
'Good chances of rain'
Certainly, the idea of export demand (even potentially eventually from the UK, if biscuit makers can't scramble up sufficient domestic supplies) was
something of an antidote to the big negative floating around for wheat prices on
Tuesday – of rain to refresh dry US soils waiting for plantings of winter crop.
There is an issue, with Rabobank saying 40% of area
earmarked for US hard red winter wheat plantings received less than half
average rainfall in the month to September 20, posing "a risk to the
establishment of the crop".
But weather models continue "to point to good chances of
rain in the southern Plains in the next three-to-four days and that has
pressured wheat contracts", especially July ones, Darrell Holaday at Country Futures
'Couple of fresh
Nonetheless, worries remain about dryness in Australia,
where market talk is now of a crop below the 20m-tonne estimate from Australia
& New Zealand Bank which surprised investors a couple of weeks ago.
"There is still a lot of concern about Australian wheat crop
with private estimates now moving below 20m tonnes," Mr Holaday said.
And, back to demand, grain traders at a major European
commodities house noted "a couple of fresh tenders on the horizon from Algeria
and Morocco both of which are normally heavy buyers of French wheat".
French wheat for November indeed closed up 0.3% at E261.25 a
tonne, amid high hopes too of victory in the Egyptian tender, the results of which
will be unveiled on Wednesday.
London feed wheat, under some pressure from talk of
potential substitution by Ukraine corn, edged 0.3% lower to £204.10 a tonne for
More harvest pressure...
For row crops, there was the all-pervading harvest pressure
USDA data overnight highlighted that, as Richard Feltes at
RJ O'Brien noted, there is "far more US harvest ahead than over, with nearly ideal
conditions next week after south Midwest rains trail off late week.
A quick harvest means a jump in supplies, and gives buyers
some, temporary, power in negotiations with growers not wanting to keep crop in
But to lay against that negative was the fact that prices
have already fallen by $1 a bushel for corn
and getting on for $2 a bushel for soybeans.
Indeed, "the soybean and corn markets are deeply oversold
and due for a technical bounce or stability", US Commodities said.
At Allendale, Steve Georgy said that while soybean futures charts
"are still suggesting that we could see more down side, the $16.00-a-bushel
level may be tough to close below for now".
Furthermore, the "current supply and demand levels have the
stock to use ratio at a point that beans could be undervalued", he added.
Even Rabobank, cutting forecasts for grain prices in 2013,
said that values were poised for a short-term bounce, once harvest pressure is
'False impression of
And Oil World went further, coming in with the latest of a
series of upbeat comments over soybean prices.
"We expect prices of soybeans and soymeal to be firm in the
near term," Oil World said.
OK, there might appear to be soybeans around, but that was
down to a strongly inverted futures curve, in which near-term contracts are
worth far more than further away ones, and which had encouraged farmers to sell
now, "giving the false impression of ample US soybean supplies".
In fact, "a severe supply deficit will develop on the US
market in 2013 primarily in soybeans and soymeal," the German-based analysis
group said, although it did add that "pronounced price pressure is expected to
develop in January-to 2013 if the anticipated large South American crops
One more immediate negative point was a continued dearth of US
crop export sales announced through the USDA's daily alerts system, although
there is plenty of talk of demand around.
"A drop in soybean prices to six-week lows continues to
uncover end-user buying," Benson Quinn Commodities said.
Chicago soybeans for November added 0.1% to $16.11 ½ a
Chicago corn for December ended down 0.1% at $7.43 ¾ a