PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 21:16 GMT, Friday, 28th Dec 2012, by
Evening markets: export data give wheat a boost, at last

At last, a positive day within the grain and oilseed complex.

And because of wheat, rather than despite it.

Wheat has been something of a depressant to futures across Chicago and beyond as, with the grain fallen below a long-term pricing corridor, investors pressed to see just how far values would go before demand turned up.

(Chicago's March contract hit a six-month low in the last session.)

But data on Friday showed that importers were indeed turning to US wheat. The US sold more than 1m tonnes of the grain last week, the biggest weekly number since January last year, and well above market estimates of a figure between 500,000 and 700,000 tonnes.

'Cheapest in the world'

"The number was somewhat of a shock to the market," Darrell Holaday at Country Futures said.

"US wheat has become the cheapest in the world," US Commodities said, adding that technically, the grain "has become heavily oversold and is looking to bounce back".

Benson Quinn Commodities said: "US is currently seen as cheapest wheat on the global after recent price break with weekly sales reflecting this."

And, indeed, futures managed a positive close, adding 0.8% to $7.78 a bushel for Chicago's March contract.

'Optimism regarding some moisture'

The question might be why prices did not revive further, given the size of the exports.

However, reticence was explained in part by the ongoing ag market caution, with end-of-year fund liquidation a feature of recent sessions, and with the prospect of fund rebalancing potentially a weight on values too early in 2013.

In the rebalancing process, index funds rejig the weightings of their portfolios back to that of the index they track, meaning selling top performers in 2012, including grains, and buying laggards.

Furthermore, there is talk of further rain/snow for dryness-pressed hard red winter wheat regions.

"The optimism regarding some moisture next week in the US hard red winter wheat areas has capped the rallies today," Mr Holaday said.

"The forecast beyond early next week is much drier and warmer through mid-January in the Plains area."

Still, Chicago's rise was enough to help Paris wheat for March gain 0.6% to E249.75 a tonne, with London wheat for May adding 0.5% to £211.75 a tonne.

Mixed data

Corn's weekly export sales number was not so upbeat, at 104,000 tonnes, below all but the gloomiest forecasts.

"The US continues to miss out on corn exports, with its market priced $20-30 a tonne above best global offers," Benson Quinn Commodities said.

What sales there had been in the latest week had gone "mainly to traditional destinations of Mexico and Japan".

However, corn got more help from weekly US ethanol data, which showed production up 12,000 barrels per day week on week at 834,000 barrels per day.

"That is a yearly pace of corn use of 4.634bn bushels" on Country Futures calculations, ahead of the 4.5bn bushels the US Department of Agriculture has factored in for 2012-13.

'Doubts about planting corn'

Furthermore, US ethanol inventories dropped 523,000 barrels to 20.32m barrels, suggesting demand for this extra output.

And an extra fillip to the grain came from Argentina, where wet conditions are prompting many growers to rejig seeding plans.

"Many farmers are in Buenos Aires are having doubts about planting late corn and are thinking about planting soy instead," US Commodities said.

"Expectations had been for a record 28m tonnes of 2012-13 corn production, but output is now likely to be 26m-27m tonnes because of the wet weather and planting delays."

First notice day

Chicago corn for March added 0.4% to $6.94 a bushel.

But the news was not so good for soybeans, which managed only a 0.3% gain to $14.18 a bushel for March delivery.

Soybean export sales were hardly upbeat, factoring in the large Chinese cancellations already unveiled last week, and leaving net export sales at a weak 87,000 tonnes, the weakest since April last year.

As an extra concern for soybean investors, the January lot reaches first notice day on Monday, the start of the expiry process, with no deliveries against the contract expected  - meaning plenty of scope for disappointment.

Softs soften

Soft commodities found headway harder to come by, which was actually more in line with the broader market mood amid persistent doubts about whether US politicians will agree a budget to avoid the country falling over its fiscal cliff.

New York raw sugar for March edged 0.2% lower to 19.42 cents a pound, losing momentum after in the last session closing over its 50-day moving average for the first time since mid-October.

Arabica coffee for March, which remains well adrift of its own 50-day moving average, dropped 0.7% to settle at 146.85 cents a pound.

And New York cotton for March lost 1.8% to 74.66 cents a pound, undermined by US weekly export sales which while not dismal at 287,000 running bales, old crop and new combined, were the weakest in nearly two months.

Morning markets: grains, soybeans start firm - at least
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