Soft commodities reversed their weakness of the last session
to post solid gains, contrasting with a dourness of grain markets, which
witnessed wheat lose its mojo.
Cotton was a
notable outperformer among softs, soaring 2.6% to 65.81 cents a pound for
December delivery, its best finish of the month.
The contract closed above its 20-day moving average for only
the second time in three months, and comfortably so too.
'Mostly dry weather'
Indeed, the improvement was attributed in part to technical
factors, with a convergence of 10-day and 20-day moving averages and chart
trend lines suggesting some sort of break-out by futures, upward or lower.
It was helped to a positive close by prospects for
less-than-ideal US weather for the cotton crop.
"The South East and Delta will get mostly dry weather," said
"Texas will see dry weather. Temperatures will average above
It was also a support that hedge funds have their biggest net
short in cotton futures and options since late 2012, raising the potential for
short-covering and price gains.
Raw sugar, in which
hedge funds also have a notable net short position, managed gains too, rising 1.5%
to 15.70 cents a pound for October delivery, if only having earlier set a fresh
six-month low of 15.38 cents a pound.
The rebound was attributed largely to profit-taking on short
positions, encouraged by forecasts of rain which will disrupt the Brazilian
harvest, although, frankly, with the huge stocks built up in the country a
slowdown would hardly spell a shortage of supplies.
added 1.5% to 188.95 cents a pound, as Cepea expanded on the threat to the
Brazil 2015 harvest from recent early blossoming which, in coinciding with
harvesting, has meant many flowers lost in machinery.
This is less of any issue for robusta, for which Brazil's
harvest is over, and indeed robusta for November added a more modest 1.1% to $1,969
'Basis on fire'
In Chicago, there was a little strength evident in the oilseeds
sector, seeing continued support from the firm US cash market for soybeans.
"Soybean basis remains on fire as Indiana - processors were
paying as high as $3.40 a bushel over November futures, and others raised bids $0.05-0.60."
CHS Hedging said.
has also been strong and supportive for beans."
Near-term soybeans, for September, gained for a fifth
successive session, if only by 0.1% to $11.02 ½ a bushel.
Soymeal for September added 0.7% to $402.60 a short ton, the
contract's highest close since June, and retaking its 100-day moving average.
At broker Jefferies, Anne Frick also saw some positive for
soymeal from a US Department of Agriculture report overnight foreseeing a jump in Brazilian poultry output next year.
"This could boost Brazilian consumption of soybean meal,"
However, further ahead contracts struggled, amid continuing
expectations for a huge US crop, even if, on Macquarie estimates, sowings may have been overblown a little.
As the ProFarmer tour of the US Midwest hits the key
producing states of Illinois and Iowa, "the theme of above average yield
reports has continued," CHS Hedging said.
Furthermore, there are some concerns over a slowdown in
orders from China, although Vietnam on Wednesday booked sales of 110,000 tonnes
of soybeans to Vietnam for 2014-15.
"One of the factors that is bearish that is not talked about
enough is that US export demand for all of the products has slowed dramatically
in the last 2-3 weeks," Darrell Holaday at Country Futures said.
"The Chinese have been absent from the US soybean market and
are rumoured to have everything bought through the end of the year and will
only be interested in January/February delivery."
November soybeans ended down 1.5% at $10.38 a bushel, a
fresh contract closing low.
December soymeal ended down 2.4% at $344.20 a short ton.
But elsewhere among oilseeds, Paris rapeseed for November managed to close 0.4% higher at E320.75 a
tonne, gaining some help from a weaker euro,
which slid 0.4% against the dollar to an 11-month low, so improving the
competitiveness of eurozone exports.
On fundamentals, ADM Germany, formerly Toepfer
International, did increased its
forecast for Germany's rapeseed crop forecast to 6.08m tonnes, but that
represented only a modest upgrade, of 80,000 tonnes.
More important for the market could be data due on Thursday
from Statistics Canada on crops in Canada, the top exporter of canola, the
The market foresees only a small upgrade, of 50,000 tonnes to
14.5m tonnes, in the StatsCan estimate, although Oil World this week pegged the
crop at 14.7m tonnes.
'Quality an issue'
Among grains, wheat
futures lost resilience as concerns waned over the idea of Ukraine limiting
exports of milling supplies.
In fact, elsewhere in the former Soviet Union, official data
underlined the strength of the Russian harvest, with 66.3m tonnes reaped from
46% of the planted area, at an average yield of 3.06 tonnes per hectare.
A year ago, 53.0m tonnes had been harvested, at an average
yield of 2.56 tonnes per hectare.
More supportive for prices was an outlook of continued
wetness for the northern US, a forecast which Benson Quinn Commodities said was
"good for the corn and soybean crops, but not so for the spring wheat with vomitoxin
and scab starting to show up in some of the early harvested wheat".
Vomitoxin is a toxic fungal residue, which can render wheat
unfit even for feed, left over from fungal infections encouraged by damp
"With wheat quality an issue already in the EU and concern
arising that there will be less milling wheat available out of Ukraine, quality
problems in the US spring wheat crop may be somewhat supportive to an otherwise
bearish global wheat market," Benson Quinn said.
Still, Chicago wheat for September closed down 1.2% at $5.39 ½ a bushel, and Minneapolis spring wheat fared only marginally better, dropping
1.1% to $6.06 ½ a bushel for September delivery.
Even Paris wheat for November ended lower, by 1.0% at E171.25
a tonne, despite the prop of a weak euro.
Ethanol stocks rise
Chicago corn fell
too, by 1.3% to $3.67 ½ a bushel for December, with soft ethanol data, and upbeat
weather outlook, undermining the more supportive recent trend.
While US ethanol production rose 6,000 barrels a day to
937,000 barrels a day last week, stocks jumped 491,000 barrels to 18.25m
barrels, up 10.7% year on year, raising concerns about the sustainability of
Sentiment was also undermined by positive comments from the
ProFarmer crop tour.