If grain markets stole the headlines among agricultural
commodities, after Ukraine, apparently, banned wheat exports, it was softs
which ratcheted up the gains.
External markets remained mired over disappointment at US
earnings announcements, notably Thursday's from Google, with shares dropping
1.3% in New York.
The average commodity found the day heavy going, shedding
0.7%, according to the CRB index.
A 0.3% rebound in the dollar
added to pressure on dollar-denominated assets, making them less affordable to
buyers in other currencies.
Weak, but not that
But cocoa found
headway easy after another set of grind data (following Europe's on Tuesday) which,
while poor, were not as bad as the market had expected.
North American cocoa grindings in the July-to-September
quarter fell 2.2%, year on year, to 121,890 tonnes.
That was less than the drop of at least 3%, and potentially
10%, that traders had expected.
Cocoa for December closed up 2.5% at £1,614 a tonne in
London, and by 2.1% at $2,489 a tonne in New York.
In London, robusta
coffee for November gained 2.1% to $2,063 a tonne after a surprise drop of
more than 10,000 tonnes, to 119,450 tonnes, in inventories for delivery against
Sucden Financial, calling the decline a "significant
drawdown", said that "as the news came in this morning the market was expected
up on the open and didn't disappoint with an $8 gap up from yesterdays close".
New York arabica coffee gained too, by 1.9% to 161.65
cents a pound, on a sport of bargain hunting after in the last session hitting
among its lowest levels in four months.
That got many
investors thinking that, with the bean now at the bottom of its recent range, a
rise might be in order back nearer to 185 cents a pound or so, the top of its chart
'Rushing to beat the
So against that background, even the 0.8% gain to $8.75 ¼ a
bushel enjoyed by December wheat in Chicago, with half an hour's trading or so
to go, looked pretty puny.
It was far lower than might be expected when a country such
as Ukraine announces an export ban.
But investors' reluctance to push prices higher reflected in
part the fact that this has yet to be confirmed by the government, if looking highly
likely, given the extent of trade talk.
Furthermore, curbs had been anticipated.
"This news, following a drop in production by one third, was
perhaps no surprise," traders at UK grain merchant Frontier, part owned by
"Exporters have been rushing to beat the ban and official
sources had already flagged that keeping bread prices low is a key government
And even without a formal ban on Ukraine exports, it was
hardly looking likely that the country had much more to give to international
markets, with its prices losing their competitive edge over those from the
likes of Europe and the US to where importers are seen switching demand from
the Black Sea.
"Recent Ukrainian offers have not been as competitive due to
higher interior prices," Benson Quinn Commodities said.
Indeed, many investors seemed more excited by the US
Department of Agriculture's announcement that the US had sold 230,000 tonnes of
wheat to an "unknown" destination.
"This has really sparked interest in the industry," Darrell
Holaday at Country Futures said.
This was in part because of the swirling speculation that
China is in for a little corn and wheat stockpiling, and was said this week to
have purchased nearly 300,000 tonnes of wheat from Canada.
"One would expect China to report the purchase as an unknown,"
Mr Holaday said.
But if some evidence looked pleasingly circumstantial as
regards a Chinese purchase, Mr Holaday also noted that the wheat bought was a
mix of hard red winter, as used largely in bread, soft red winter, for bread or
feed, and durum, used in making pasta.
"That does not sound like China. Sounds more like an
Egyptian or Korean purchase."
Still, such trade "is what the market has been anticipating as
the world price of wheat has been moving up and now very close to US offers".
US Commodities said: "US wheat is now nearing competitive
Indeed, ideas of strong competition from Europe are losing
ground too, given the run of downgrades, the latest on Thursday by Strategie
Grains, to the region's corn harvest.
"Due to limited global corn supplies, the European Union
will likely have to factor in higher feed wheat usage, which would stress their
wheat pipeline, if their current pace of exports continues much longer," Benson
Quinn Commodities said.
"Many in the trade have estimated a stocks-to-use ratio for
the EU at well under 10%," a low figure signalling tight supplies and therefore
strong competition among buyers for supplies, and high prices.
In fact, Rabobank, in a bullish report on crop prices, issued a figure of 6.1% for the EU stocks-to-use
ratio at the close of 2012-13 – the lowest since records begin in 1960.
In Europe itself, wheat for November added 1.2% to E262.75 a
tonne in Paris, and 1.4% to £206.25 a tonne in London.
'Is that it?'
Back in Chicago, wheat's performance helped fellow grain corn.
But so did the idea that, with harvest nearly over, pressure
on prices from the once-a-year spike in supplies will wane too.
"The market is now looking around with and asking, 'is that
it?'" Mr Hoalday said.
"No longer will the market sell them grain. End users are very
quickly realising they now have to go out and buy grain."
Furthermore, US cash markets remained firm too.
And, as an extra signal of happier times for bulls, December
corn nudged higher its premium over the March contract to some 2 cents a bushel
– growing the so-called bull spread, and signalling some tightness in near-term
(Usually, it is later contracts that are worth more, to
account for storage and interest charges, and risk.)
Corn for December added 0.3% to $7.62 ¾ a bushel.
However, soybeans could not hold on to gains, in part on
mixed signals from South American weather, with wetness which is hampering
Argentine corn sowings potentially fostering a switch to soybeans.
Furthermore, while there were many investors who reported that
weather was too dry in central and northern Brazil, a bad sign for sowings,
others said the opposite, with US Commodities, for instance, terming conditions
in these regions "non-threatening".
Richard Feltes at RJ O'Brien also reminded of the large speculative
net long position which still remains over the oilseed.
"Fund longs, farmers and small spec ulative longs would like
to believe that fall lows are in.
"But large managed fund longs overhanging the market will keep
Soybeans for November eased 0.4% to $15.38 ¾ a bushel in