Perhaps predictably, grains chose to end their rally just as
shares were refinding their feet.
Stocks enjoyed a firm day, notably on Wall Street where the
S&P 500 index reached its highest in five years, helped by optimism over
the US after data on Thursday showed US weekly initial jobless claims tumbling
and housing starts soaring.
And many commodities managed headway too, with the CRB index
adding 0.7%, and among ags, New York arabica
coffee gaining 1.6% to 154.50 cents a pound for March delivery, attributed
in part to technical buying
"Today we initially saw light small spec support but
certainly as we tested higher it did bring in fresh technical buying and this
encouraged day traders in too," if against pressure from producer selling,
Sucden Financial said.
Data from consultancy Safras & Mercado showing 60% of
Brazil's coffee crop sold received a mixed response – being well below the 76%
figure a year ago, so signalling more beans yet to sell, but ahead of some of the
more downbeat expectations too.
However, grains and oilseeds rediscovered their knack for
moving the opposite way to other markets – even corn, which ended its longest
winning streak since June.
The problem was not so much a lack of fresh bullish news,
with weekly US export sales data, for instance, deemed "impressive" by US
Commodities and "supportive" by rival broker Country Futures.
The US sold 393,000 tonnes of corn, the second highest
number of 2012-13 and more than twice some expectations, and more than 570,000
tonnes of wheat, old crop and new combined.
"These are not seen as great numbers in a normal year, but
strong numbers given the recent export activity," Country Futures' Darrell
'Bullish price risk'
For soybeans, the total reached nearly 1.8m tonnes,
including 2013 crop, a number termed "massive" by RJ O'Brien and the highest in
Mr Holaday said that while Chinese buyers accounted for more
than 1m tonnes of that, the market had been aware of much of this through earlier
US Department of Agriculture announcements, meaning "the impressive number was
the amount bought by other countries".
After all, the world is not far from seeing Brazilian export
supplies come onstream, with harvest already begun – although some rain delays,
and logistical hiccups, could put a spanner in the works.
"In the very short term we feel there is some bullish price
risk in the soybean complex as we go through the transition from US to Brazil
export dominance," Macquarie noted, flagging that "the timing of the early-harvested
Brazilian soy will be critical".
"The forecast of heavy precipitation in the coming weeks
risks delays to harvest and thus export potential. Any supply potential lost
from Brazil in February will have to be sourced from the US."
However, the support from the export data was muted by the
fact that it related in the week to last Thursday – the day before the USDA
data which reignited bullish sentiment in corn and wheat particularly.
Price rises since raise questions over whether the strong
exports will continue.
"US wheat was competitive in the world trade until the
recent sharp rally," Paul Georgy at broker Allendale said.
Nor was there any ideas of the recent South American dryness
worsening, and requiring the injection of more risk premium.
"A couple of weeks of dry weather in this region does not
put us on the brink of the poor production experienced last growing season,"
Benson Quinn Commodities said.
OK, the US weather picture did take a turn for the worse
with a National Oceanic and Atmospheric Administration forecast showing that
above-average temperatures look likely this summer for the western Corn Belt
and the US Plains – still suffering from the last drought.
"The updated NOAA US summer temp forecast will reinforce
concerns over the upcoming 2013 US weather pattern," RJ O'Brien's Richard
Feltes said, terming the outlook "borderline alarming".
But long-term weather outlooks are notoriously unreliable. And
on a more immediate horizon, Mr Feltes also noted that the "cold blast across
US early next week still coming buy looking less severe than yesterday",
important when some US wheat is said to be lacking a snow blanket.
'More risk premium'
Even a downgrade by Strategie Grains to expectations for the
European Union wheat crop, following on from an industry caution on Wednesday
over Russia's winter grains, and against lingering concerns over US winter
wheat, failed to spark much reaction.
Nor did an International Grains Council reduction in its estimate
for world corn stocks, to 113m tonnes, 3m tonnes below the USDA figure.
But have such numbers already been factored in?
There was some expectation that price falls were only
temporary, with Mr Fletes saying he suspected that ag markets would "add more
risk premium" ahead of the weekend.
'Less shame in
getting caught short'
However, investors looking for more reassurance from
technical signals received little, with corn dropping back right to its 50-day
moving average, and soybeans trading up to their 200-day moving average, at $14.46
¼ a bushel, only to fall back again.
"Despite the supportive export data released this morning,
I'd find less shame in getting caught short from these levels than getting
caught long," Benson Quinn Commodities said, adding that "producers should be rewarding this rally" by
selling into it.
Corn actually led the retreat in Chicago, falling 0.9% to
$7.24 ½ a bushel for March, its first decline in nine sessions, and further
reinflating its discount to wheat, which for March dropped 0.5% to $7.81 ¼ a
March soybeans eased 0.4% to $14.30 ¼ a bushel.
Among soft commodities, cotton
also performed respectably, adding 0.6% to 77.78 cents a pound, and earlier
touching an eight-month high of 78.18 cents a pound.
Strong weekly US export sales of 339,000 running bales further
improved sentiment stirred by expectations of a large drop in US sowings with
the fibre this year, as low prices deter growers.
Macquarie forecast a "near-20%" drop in acres.