While corn has stopped, for now, putting in multi-year lows,
that doesn't meant that bears have loosened their grip on grains.
They have merely turned some of their attention to wheat.
Chicago's March wheat lot, about to take over as the spot
contract, after the expiry of the December lot tomorrow, closed down 1.1% at
$6.33 ¾ a bushel, its weakest finish ever, and the lowest for a nearest-but-one
contract for nigh on 18 months.
The contract is now down more than 5% so far this month,
displaying more of a Santa rout than a Santa rally.
In truth, it was hardly the most favourable day for
commodities in general, with the dollar
rising 0.4% against a basket of currencies, boosted by ideas that US easy
monetary policy might be tapered out sooner rather than later.
A stronger dollar undermines prices of dollar-denominated exports,
such as commodities, by making them less affordable to buyers in other
The CRB commodities index lost 0.3%.
For Chicago wheat, export demand is particularly sensitive,
given the slowing pace of US shipments, the lack of high profile export deals and
the huge harvest north of the border in Canada now to compete with.
In fact, Algeria on Thursday bought 150,000 tonnes of durum
wheat, at $405 a tonne including freight, expected to be sourced from Canada.
As a reminder, Canada last week upgraded its canola and wheat harvests to clear record
highs, although the impact on markets has been somewhat delayed.
Canola, the rapeseed
variant, too has seen a somewhat delayed acceleration in selling, tumbling 2.1%
on Thursday to close at Can$448.10 a tonne in Winnipeg for January delivery, the
lowest finish for a spot contract since August 2010.
The contract is now down nearly 10% this month.
Unsurprisingly, Paris rapeseed has suffered too, although less
so, protected somewhat for now by being within the European Union, the top
consumer of the oilseed, and not needing to compete for export market share.
Paris rapeseed for February shed 0.8% to E366.00 a tonne.
US vs EU
But back to US exports, and while US data showed a sharp
rise sales last week to 372,000 tonnes for this season, that was at the low end
of market expectations, and not big enough to calm investors' nerves.
As the US Department of Agriculture put it: "Net sales of
372,200 tonnes for delivery during the 2013-14 marketing year were up 62% from
the previous week, but down 12% from the prior four-week average."
Furthermore, on actual exports, while the US shipped 563,200
tonnes, up 53% week on week, that was still eclipsed by the European Union,
which issued licences for 780,000 tonnes this week.
As an extra problem, as US Commodities said, "the technical
trend remains bearish in wheat," with contracts struggling to find a floor.
One hope for wheat bulls is that contracts are now looking
technically oversold, especially in Minneapolis, where the March spring wheat contract
lost a further 0.7% to $6.68 ½ a bushel, a fresh contract low, and the lowest finish
for a nearest-but-one contract since July 2010.
(Most of Canada's crop is spring wheat, meaning last week's
crop upgrade is particularly felt in Minneapolis.)
Paris wheat for January did better, shedding a modest 0.4%
to E205.75 a tonne, helped by decent export data as well as by a softer euro.
Of course, corn was
of little help, itself falling 1.1% to $4.34 ¼ a bushel for March.
That said, the close was well above the intraday low, of
$4.28 a bushel, and, crucially from a technical perspective, kept the contract
above its 10-day and 20-day moving averages for a seventh successive session.
Corn was offered support by decent export sales, of 695,000
tonnes of old crop and 109,000 tonnes of new, at the top end of market
And a further 120,000 tonnes of US corn was sold to an "unknown"
importer on the day.
There was plenty of talk about strong ethanol margins too,
after weekly production data on Wednesday came in at the best in very nearly
"US ethanol manufactures are seeing their best profit
margins in more than five years," CHS Hedging said.
US Commodities said: "Near-record export demand for the
dried distillers' grains, or DDGs, produced at ethanol plants also lifted
margins to as much as $1 per gallon of fuel produced - the highest levels since
before the Renewable Fuel Standard was instituted in 2007."
'Can invite demand'
However, the sting was taken out of such talk by an
announcement that 10 senators had introduced a bill to eliminate the ethanol
mandate altogether, rather than just reduce it as the Environmental Protection
Agency is proposing.
And ethanol itself extended its decline in Chicago, tumbling
5.2% to $1.83 a gallon for January delivery, so eating into producers' margins.
And as for the strong corn export sales, this is "scenario
that has little positive influence in a market that can invite demand"
following a record US harvest, Benson Quinn Commodities said.
'Good exports is old
Exports for soybeans
were strong too, at 1.11m tonnes of old crop, and a further 414,000 tonnes for
2014-15, well above market expectations.
However, the January contract closed down 1.2% at $13.11 ½ a
The trouble was that shipments to China, the top importer,
made up a relatively small proportion, and may yet be cancelled if South America's
crop turns out big, which currently looks likely.
"The issue with the soybean complex is that news of good
exports is old news, and the most recent sales to China continue to be optional
origin contracts and will likely be optioned to South America," Darrell Holaday
at Country Futures said.
Benson Quinn Commodities said: "The trade is also trying to
handicap the potential of US sales being shifted to South America or sales
'Will we ever bounce?'
Among soft commodities, raw
sugar extended its losing run, falling 1.3% to 16.30 cents a pound in New
York for March delivery, the lowest close for a spot contract in more than
"Will we ever bounce in sugar?" Thomas Kujawa at Sucden Financial
"It's hard to see an investable story to go long sugar at
present. The problem for the bulls it seems is they have no credible/tradable
story for the medium term."
regained the offensive, adding 1.2% to $2,787 a tonne in New York for March delivery,
helped by concerns of a fall-off ahead in deliveries of beans to ports in Ivory
Coast, the top producer and exporter.
"The bad start to the cocoa season in Ivory Coast would
result in a decline in production next month," Vanessa Tan at Phillip Futures
"Therefore, we believe the bullish fundamentals of the
market will prevail and support cocoa prices."
'Only a question of
And robusta coffee
got back on the front foot, helped by data showing that stocks held for delivery
against London futures had fallen to 31,420 tonnes as of December 9, the lowest
since March 2009 and down more than 30% in two weeks.
The March contract rose 1.6% to $1,775 a tonne.
Not that all investors are too impressed, with Commerzbank saying
that with Vietnam, the top robusta producer, expecting a record 30m-bag harvest, it is "only
a question of time" before soaring supplies will weigh on prices.
"The price differential between arabica and robusta coffee recently was at its lowest level since
2008, which is also unlikely to leave the demand side unscathed," the bank said.
"We can therefore expect to see lower robusta coffee prices
over the next few months, partly because the arabica market is likewise amply supplied."
Still, arabica coffee did its best to try to rebuild its
premium, gaining 2% to 111.30 cents a pound in New York for March.