It looked pretty difficult for risk assets to close lower,
after stronger-than-expected Chinese trade data.
But many Chicago crops managed it nonetheless.
The statistics showing China's exports soaring by 14.1% in
December, from a year earlier, the fastest pace in seven months, and imports
rising by 6% spurred ideas that the world's second-ranked economy was in better
form than had been thought.
Shares rose, reaching their highest since March 2008 in
London, while the safe haven of the dollar turned sharply lower, by 1.1%.
That may dollar-denominated exports, such as many
commodities, more appealing and indeed the average raw material gained 0.9%, as
measured by the CRB index.
Soft commodities capitalised on the weaker greenback, with New
York cocoa rising 2.1% to $2,269 a
tonne for March delivery, boosted by talk of bargain hunting among chocolate
groups, with values remaining close to their lowest since July.
Raw sugar for
March added 1.3% to 18.96 cents a pound, boosted by expectations that the
ongoing index fund rebalancing exercise, which revises their portfolio
weightings back to those of the index they track, will see a stack of the sweetener
And New York cotton
for March edged 0.3% higher to 75.00 cents a pound, underpinned by US weekly
exports of more than 200,000 running bales, old crop and new combined – an improvement
on last week's number, if below some of the strong figures managed late last
More soybean sales
But in Chicago, soybeans suffered a negative close, down
0.4% at $13.79 ¾ a bushel for March delivery.
And this despite weekly US export sales data coming in at
more than 400,000 tonnes, old crop and new, beating market expectations.
Furthermore, the US Department of Agriculture announced,
through its daily reporting system, the sale of 180,000 tonnes of US soybeans
to China, fulfilling rumours of sales.
Or some of the rumours - with talk of numbers far bigger
than three cargos.
'China believed to be
sourcing world wheat'
For wheat too, there was generally positive export news,
with US grain winning half of an order by Egypt, the world's top importer, with prices
well below those in Europe.
Indeed, there is talk of buyers, including from Europe
itself, assessing US wheat, besides those from China, where ideas of
unexpectedly tight supplies are gaining traction.
"Chinese wheat values have moved to a $24-a-tonne premium to
corn," US Commodities said.
"Thus China is believed to be sourcing world wheat," with US
supplies seen as a likely target – by some.
Benson Quinn Commodities was more sceptical saying it could "get
on board with rumours that China has secured Canadian wheat production of late"
but was "not seeing signs that they have been buyers of US wheat".
'Chatter about index
Indeed, US wheat weekly exports, at 234,000 tonnes, were
below market expectations of a figure of at least 325,000 tonnes.
And what soybeans and wheat also had to deal with was ideas
of heavy selling by index funds during the rebalancing exercise, with the crops'
strong performances last year, and some index weighting rejigs too, making them
a target for position sell-downs.
"A lot of chatter about index fund rolls has markets taking
their eyes off the fundamental ball," Rory Deverell at FCStone said.
And all this, of course, against the background of a clutch
of USDA reports on Friday which have got many investors nervous, given their
history of inspiring hefty price moves.
The USDA will unveil its monthly Wasde crop report, with
long-awaited final numbers for the 2012 domestic corn and soybean harvests, US
grain stocks data, which are notoriously difficult to predict, and figures for winter
The one major Chicago crop which has gained in the final
sessions before the data is corn, which
for March delivery ended Thursday up 0.6% at $6.98 ¾ a bushel, a fourth
consecutive positive close.
And this despite weekly corn sales coming in at 12,600
tonnes, a sum deemed "very low" by US Commodities, and "dismal" by Richard
Feltes at RJ O'Brien.
But what is attracting attention is the strong cash market.
"Basis levels in many parts of the country are at record
highs," Jerry Gidel at broker Rice Dairy said.
"That is spurring ideas that domestic consumption is
warranting higher prices being put in place to secure supplies," persuading
farmers to open their barn doors.
And, with corn prices especially prone to limit moves after the
USDA's slug of January data, there could be gains to be made for those taking a
bet on bullish reports.
"That would be constructive for old crop corn futures."
The thinking that US feed use may have been bigger than
thought is based in part on theory, and calculations of thethe levels of domestic livestock
"It might work if all sectors had cut their numbers as much
as cattle on feedlots," Rice Dairy's Jerry Gidel said.
"But chicken and hog farmers are holding on," in the hope of
lower feed prices ahead, and so higher margins.
However, there is some tangible evidence too, in terms of
the strength of the US cash market, despite weak demand from export merchants.