Corn futures have
developed something of a reputation of late for last-minute revivals.
As Darrell Holaday, at Country Futures, noted, "the tendency
recently has been for the corn market to struggle much of the day and then
rally into the close".
This pattern "is generally a sign of commercials looking for
price breaks to gain some coverage".
So could they extend that trend on Friday?
In a word, no.
Chicago's benchmark March corn contract ended at $7.20 ¾ a
bushel, down 0.5% on the day, and only 3 cents or so above its intraday low.
(Signally, it was also back below its 10-day and 50-day
moving averages, not a good omen for hte next session.)
The killer was weekly US export sales data which, yet again,
showed corn disappointing investors, with a figure of 190,000 tonnes, old crop
and new, well below the 250,000 tonnes or so expected.
"Weekly corn sales continue to argue that US offers are too expensive
- which is an easy argument to win as global origination points have corn and
feed wheat offered at cheaper and/or
competitive prices," said Benson Quinn Commodities.
Richard Feltes at RJ O'Brien said: "Poor corn export sales
reinforce the view that current prices are cutting use appreciably", implying
that higher values are not needed to ration supplies.
Indeed, it added to the rationing apparent in ethanol
production too, with Poet late on revealing that it is to close a Missouri plant,
the latest in a series of temporary shutdowns estimated by some to have
mothballed 20% of US capacity.
Wheat sales rise
In fact, there was something of a "last will be first" theme
about the market, with wheat, which has
been the butt of short wheat, long corn/soybean spreads, outperforming its
fellow grain, and rebuilding something of a premium.
Chicago's March wheat contract closed 1.0% higher at $7.76 ½
But then, the grain's weekly US export sales data were
considerably more encouraging, in coming in above 650,000 tonnes, well above
"Global demand for wheat continues to pop up, which should
allow the US to continue the current pace of exports," Benson Quinn said, if
adding that "more demand is going to be needed to begin to cut into ample
Furthermore, fears over the drought in US hard red winter
wheat country failed to get reassurance from weather forecasts, with US Wheat
Associates flagging that some (yet-to-be-sown) hard red spring wheat country
looked in danger too.
In New York, the "last will be first theme" saw cotton slide 2.9% to 80.52 cents a
pound for March delivery, the first decline in eight sessions.
"The market showed a lot of signs of turning in the last
session," when it ended well below its intraday, six-month high, Keith Brown at
broker Keith Brown & Co said.
Eerily, the contract also peaked one day past the January 23
date at which the March 2012 lot topped last year.
"Markets can be quite repetitive," Mr Brown said, noting a
trend of patterns to reap themselves three times.
Not that this necessarily represented the end of the current
rally, he added, if flagging the reversal of buy old crop, sell new crop
spreads which on Friday saw the December lot lose only 0.03 cents, to end at 79.70
cents a pound.
Meanwhile, New York arabica
coffee for March rebounded to close 1.2% higher at 148.30 cents a pound.
Commerzbank flagged forecasts from Conab that Brazil will
harvest 47m-50.2m bags of coffee overall this year, above a previous record for
a low-yield year of 43.5m bags.
"What is more, Conab officials are confident that improved
cultivation methods and the planting of new higher-yield coffee shrubs will
erode the differences between high- and low-yield years," the bank said.
However, reports that many coffee plantations in Central America
are under attack by the roya fungus "should put paid to any further price slid",
with the region accounting for 13% of total coffee, output and 20% of arabica
Honduras, region's biggest coffee producer, this week cut
its harvest estimate by 13.6% to 4.9m bags.
'Marching toward a
Back in Chicago, soybeans
for March also recovered, after two negative closes, to end up 0.4% at $14.41 a
The oilseed was helped by US weekly export sales of nearly
1m tonnes, old crop and new, marginally ahead of forecasts, which allowed it to
benefit more than corn from continued South American wheat uncertainty.
"There is a system moving through Argentina tonight. That
has capped rallies, but the outlook generally looks warm and dry over the next
two weeks," Darrell Holaday said.
"February is going to be a critical month as the soil moisture
has been depleted and the key reproductive stages have started and will stretch
through the next month."
US Commodities said: "The weather in South America remains
borderline threatening, but we are marching toward a crop each day."
The market is also marching towards an expected squeeze on
Brazilian logistics which may mean vessels queuing for 45 days to load with
soybeans, improving the appeal of US supplies.