Certainly, the grain is showing an increasing willingness to
post positive closes.
A rise of 0.5% to $6.09 a bushel for Chicago's benchmark March
contract may not sound much but it represents only the fourth positive finish
in December, and the second within the last week, representing some hope of an improvement
in a month which, as of the last session's low, had brought a fall of 10% so
'Some value on the
That said, it took a monumental effort to keep the grain on
the upward path, in the form of weekly US export sales of more than 650,000
tonnes, old crop and new crop combined, well ahead of expectations of at best
550,000 tonnes, and one of the best performances of the last three months.
This eased some of the concerns that US wheat exports are
struggling to compete with foreign competition.
"Large world supplies continue to pressure the wheat markets
as traders aim to other world wheat suppliers that the US due to more favourable
prices," CHS Hedging said, ahead of the data.
However, strong wheat sales indicate "some value on the
global market", Benson Quinn Commodities said.
'Brief round of
And that is not so surprising with Chicago wheat futures trading
near their lowest levels in 19 months.
"Prices slumped 22% this year, closing in on the biggest
annual drop since 2008, as the US Department of Agriculture forecasts a world
crop at an all-time high of 711.4m tonnes," US Commodities said.
Still, Benson Quinn Commodities said with wheat supply "not
an issue… it would seem a recovery from the current levels would have more to
do with sellers backing off than the trade wanting to establish new length".
The broker said that it "wouldn't be surprised to see a
brief round of short-covering prior to the end of the year", but harboured "doubts
that being bullish the wheat market is the thing to do".
An end-of-year revival could be spurred by profit-taking,
with speculators holding a record net short position, as of Tuesday last week,
meaning that position closing will raise prices.
'Corn has value'
Much the same goes for corn
too, with short-covering seen as a big reason behind the grain's price
stabilisation this month, despite this year's record US harvest.
Furthermore, US export sales of the grain were huge this week,
at 1.48m tonnes for 2013-14 - "up 79% from the previous week and up noticeably
from the prior four-week average, according to the USDA – and 509,200 tonnes
for next season too.
Investors had expected at best 750,000 tonnes, old crop and
"This morning's sales indicate US corn has value on the
global market, which complements the fact that US end users can also find value
near these price levels," Benson Quinn Commodities said.
"Unless the corn market does more chart damage, trade in a
relatively narrow range should be expected through the end of the year."
Certainly, the export sales allayed some of the concerns
over Chinese export rejections to help Chicago's March contract end up 0.3% at
$4.27 ½ a bushel.
Still, it was soybeans
among Chicago's big three which did best, soaring 0.7% to $13.13 ¾ a bushel for
March, helped by its own decent export data too, at 788,300 tonnes old crop and
new combined, a little above market expectations.
Signally, this included 517,700 tonnes to China, whose
demand for US soybeans is being viewed with particular concern, given the
prospect of huge South American crops, and a switch to Argentina and Brazil for
And even if China does ditch American soybeans for Brazilian
ones, well, 1.17m tonnes of US soybeans were actually shipped to China last
week, cutting the potential for origin switching.
As to South American crop prospects, ideas improved for some
parts of Argentina, re: dryness and high temperatures currently stressing corn
"The Argentina corn/soybean belt forecast is wetter in
northern areas through early next week," weather service MDA said.
However, it was not all so benign, according to WxRisk.com,
which said that "should be pointed out that all the weather models keep the
rains out of all of Buenos Aires and northern La Pampa.
"Temperatures continue to run above normal over all of
Argentina and into south eastern Brazil over the next five days but not quite
as warm as what we have seen."
Among soft commodities, New York arabica coffee rose too, adding 0.8% to 116.35 cents a pound for
March delivery, the best finish for a spot contract in two months.
The bean got help from a strong Brazilian real, which boosts
the value of goods such as arabica in which the country is a major player,
besides by the relatively weak premium over rival robusta coffee supplies.
The stronger real gave a boost to raw sugar too, which added 0.9% to 16.43 cents a pound in New York
for March delivery.