So much for a move by the maximum the Chicago crop futures
Corn futures had
their moments, rising 3.6% at one point, after the US Department of Agriculture,
unexpectedly, cut its estimate for domestic inventories of the grain.
But they lacked the stamina to maintain the record for limit
up, or down, moves which have occurred on five of the previous six January days
when the USDA has released its slew of data - including the benchmark Wasde
report on crop supply and demand, figures on US grain stocks and on domestic winter
wheat sowings too.
Chicago's benchmark March corn lot ended 1.4% higher at $7.08
¾ a bushel, at least closing above $7 a bushel for the first time this year, remaining
well clear of the move of more than 5% needed to touch the daily limit on price
'No rationing of
It was not that the data were not bullish.
OK, the USDA raised its estimate for last year's harvest,
defying market expectations of a downgrade, and slashed 200m bushels (5.1m
tonnes) from the forecast for corn exports in 2012-13, now seen hitting a
But the department more than offset the impact of these changes
by hiking by 300m bushels (7.6m tonnes) the estimate for domestic consumption,
after inventories as of the start of last month were found to be far thinner
than had been thought.
"The stocks number indicates there has been no rationing of
supplies domestically other than the ethanol industry," Darrell Holaday at
Country Futures said.
The estimate for stocks at the close of the season was cut
by 45m bushels to 602m bushels, the lowest for 17 years.
Investors had expected an upgrade to the supply estimate.
'Strong and volatile
In theory, that might have sent prices soaring.
Indeed, Richard Feltes at RJ O'Brien flagged the need for
relatively high prices of 2012-crop corn "to trigger farm selling and throttle
The USDA itself said that "historically tight" stocks were "expected
to support continued strong and volatile prices well into summer, particularly
in the domestic cash markets".
'Lack of fund support'
But investors came up with a range of reasons for only a
"It seems that the US and the rest of the world are getting
used to coping with miniscule ending stocks," traders at a major European commodities
"The trouble is the lack of fund support. There is not the
interest in ags, as we have seen in the liquidation of the last couple of
months," a UK grain trader said.
"We need a more sustainable story, a weather scare, which can
capture the imagination more."
At RJ O'Brien, Richard Feltes flagged a knock-on negative effect
from separate data on US winter wheat sowings, showing them some 870,000 acres
short of expectations.
"Lower winter wheat acres add to the 2013 row crop area
base," he said, meaning more land than expected is vacant for US corn and
soybean sowings this spring.
Indeed, the wheat sowings data was another reason to sell
soybeans, for which upgrades to estimates for US stocks, and the world harvest
in 2012-13, provided some others.
"The world numbers were generally negative, with the
Brazilian crop increased to 82.5m tonnes, from 81m tonnes," Country Futures' Darrell
"Extra soybean supply and a larger South American soybean
crop lessens the need for soybean rationing," Mr Feltes said.
That was reflected in a drop in Chicago's March contract to
$13.51 ½ a bushel at one point, the lowest since late June, before a recovery
to close at $13.77 ½ a bushel, down a modest 0.2%.
As for wheat itself, it soared nearly 4% at one point, being
supported also, besides by the weak winter sowings number, by a cut to the
estimate for stocks at the close of 2012-13.
"Most supportive was the fact that USDA increased feed use
for the current crop year by 35m bushels," Mr Holaday said.
"This pushed the ending stocks number down to 716m bushels -
much tighter than the industry expected."
However, he added that "rain in the southern Plains this
week has kept the wheat market in check", in diminishing fears for drought
damage to winter wheat seedlings.
Index fund selling again?
The late drop in prices was also consistent with a pattern
this week, blamed on selling by index funds
which have a hefty amount of the grain to sell in Chicago (and buy in Kansas)
to make their portfolio weightings consistent with those of the index they
Kansas wheat for March actually added 1.3% to $8.07 a bushel,
while the Paris equivalent added a more modest 0.4% to E244.75 a tonne in the
half an hour it traded after the data were released.
London wheat for May added 0.7% to £209.50 a tonne.
The pullback in corn and wheat was not, however, enough to prevent a drop in livestock futures, which baulked at the prospect of tighter supplies, and potentially extended elevated values.
Live cattle for February lost 0.7% to 130.675 cents a pound in Chicago, where feeder cattle for March shed 0.8% to 151.75 cents a pound.
February lean hogs lost 0.3% to 84.35 cents a pound.
Returning to with index fund rebalancing, there was a suspicion
that this was in part behind positive closes in New York arabica coffee and raw sugar
futures, which had struggled earlier.
"New York coffee today has remained relatively positive and
overall not a bad weekly close, Sucden Financial said, after the March lot
ended 2.5% higher at 153.35 cents a pound, a two-month closing high for a spot
"Even though the reweighting hasn't quite lived up to its billing
we have managed to see values move out of the higher end of March's 140-150-cents-a-pound
range," the broker said, adding that speculative support was factor too, and "absorbed
the light origin selling".
Raw sugar for
March rebounded to get close to its 50-day moving average, at 19.22 cents a
pound, before closing at 19.17 cents a pound, a gain of 1.1%.