Grains eventually got round to following the script that
many investors had prepared for them, of a soft finish to the week, but it
meant ignoring a broadly positive close in other markets.
Many risk assets took heart in much-anticipated comments
from Ben Bernanke, the Federal Reserve chairman, who said that the US central
bank would ease monetary policy "as needed", while backing as "effective… non-traditional
policy measures", code for quantitative easing.
Wall Street stocks
were 0.8% higher in late deals, while the dollar
tumbled 0.6% for fears of debasement by monetary easing.
A softer greenback
supports prices of dollar-denominated exports, including commodities, by making
them more affordable to buyers in other currencies.
And indeed, the CRB commodities index added 1.0%, helped by
1.8% rise in Brent crude to $118.70
a barrel in late deals.
Many soft commodities managed just about to surf the wave,
with New York December cocoa adding
0.3% to $2,610 a tonne, sure, not a huge jump, but one which lifted the bean to
it highest finish, for a nearest-but-one contract, for nine months,
Worsening prospects for production in the Ivory Coast crop,
the world's biggest, where cool weather is hurting yield hopes, added to upbeat
And even raw sugar
managed gains, adding 0.2% to 19.78 cents a pound for October delivery, despite
the International Sugar Organization calling time on a four-season period of
tight supplies and cautioning over "bearish pressure on prices".
New buying next week?
That said, the prospect of the end of the month, typically a
period when funds close some positions, and a long weekend, which also tempts
investors to take profits, was supportive of sugar values, given that it is
short positions which have been in vogue in the last few weeks.
For grains and oilseeds, in which funds have been piling on long
exposure, this dynamic worked in the opposite direction, one reason many had
forecast a soft lead into the US Labor Day weekend.
OK, there is some expectation that this would only prove
"The floor is looking for new buying to show up next week in
the entire complex," Mike O'Dea at broker FCStone said.
However, Friday barely felt like a day to jump in when a glance
at history rang alarm bells.
"On August 29 last year, a top was put in on soybeans. We
made a contract high yesterday in the November soybean contract," Allendale president
Paul Georgy said.
And there were some more current negative developments
around which bears could make a decent case.
One was Russia's declaration that it would not impose grain export curbs, despite looking at a wheat
harvest, on SovEcon estimates, more than 2m tonnes lower than the 2010 result which
prompted a full ban on shipments.
"The Russian announcement has provided the most selling
pressure in wheat and that has bled into the corn market," Darrell Holaday at Country Futures said.
"This probably surprised the market given the 38m-tonne
Furthermore, for Western Australia, the country's top grain-growing
state where dryness is threatening crops, "the six-to-10 day weather outlook is a little
wetter and that is adding to some of the selling pressure in wheat", Mr Holaday
Another negative came from technical analysis, with Chicago's
December corn and wheat contracts falling decidedly back under their 20-day
In soybeans, "profit-taking
has developed as the market was not able to challenge yesterday's contract
after settling on a weak note yesterday", again seen as a chart setback, Benson
Quinn Commodities said.
Indeed, foreseeing early on that "perhaps the order of the
day will be profit-taking ahead of the weekend", it said that "price action is
hinting that poor yields have been factored in to a large extent, which makes
sense at $8.00-a-bushel corn and $17.50-a-bushel soybeans.
"While demand will have to be rationed, the impending
shortage of US corn and soybeans is not a current issue as harvest progresses."
Brazil corn lands in
Meanwhile, Friday also brought another reminder of the weak
competitiveness of US corn exports, with reports that the first load of the grain
purchased from Brazil, by feeds users desperate for competitively priced
ingredients, is unloading on the US east coast.
This after another week of poor export sales data, released
OK, traders continue to applaud soybean shipments
"Export sales are at 58% of the US Department of Agriculture
export goals for 2012-13, versus 27% on average," US Commodities noted.
Also deliveries against expiring September contracts came in
at zero for corn, soybeans and Kansas wheat, a signal of better values in cash
markets, while 334 contracts of Chicago wheat were delivery, and 56 oats.
And wheat gained a snippet of support from an official German harvest estimate a little below that of private consultants, and acknowledging some disappointing protein results in a harvest "satisfactory" on quality overall.
However, it was not enough to shrug off that month-off
selling feeling to send Chicago soybeans
down 0.6% to $17.56 ½ a bushel for November delivery.
December corn lost 1.1% to $7.99 ¾ a bushel, while December
wheat, feeling the extra pressure of deliveries and Russia's decision, dropped
1.8% to $8.89 ½ a bushel.
Earlier, Paris wheat for November closed down 1.1% at
E263.75 a tonne.
London's November contract ended down 0.6% at £204.85 a
tonne, getting some support from the dismal state of the UK harvest, which on
one quality measure is the worst for at least 36 years, and the restarting of the
Ensus bioethanol plant, taking up to 5,000 tonnes of wheat a day.