If one trading pattern beloved of Chicago traders, the
Turnaround Tuesday, failed it was because another one held.
Crops did not following the script of reversing the strong trend
of a Monday and, in this case, closing higher.
But soybeans at least did manage to fulfil the idea of fund trouble,
for bears or bulls, coming in threes.
"Funds usually buy or sell in three-day chunks," Mike
Mawdsley at broker Market 1 said, noting that meant that "those wanting out are
able to do so in an orderly fashion".
Benson Quinn Commodities also suggested that Tuesday could "finish
a three-day liquidation phase".
Long losing streak
"If only it was three," corn
investors might say.
The close of Chicago corn for March down 0.9%, while not
large in extent, was large in significance, in marking an eighth successive
negative close, the longest since March 2010, besides taking the lot back below
the psychologically-important point of $7 a bushel.
The contract actually finished at a one-month low of $6.96 ¼
investors, it was actually only a second successive negative close, although it
might feel like more, in Chicago's March lot falling 1.3% to $7.32 a bushel,
its lowest close for seven months.
But Chicago soybeans
for March did fall for a third successive trading day, this time by 0.8% to
$14.20 ¾ a bushel, a four-week low. (Will there be a fourth negative close?)
The drop put the contract's the 30-day moving average, which
achieved brief fame after in the last session in marking the closing price,
firmly in the rear-view mirror with the better-known 20-day, 50-day, 200-day etc
The decline was attributed, largely, to the same cocktail
which sank prices in the last session – an improving South American weather
outlook boosting supply hopes at a time when big Asian buyers, such as China, are
on holiday, so leaving the demand picture looking threadbare.
On the weather, the outlook appeared better for farmer on the
In Argentina, which needs rain "the weather in Argentina is
wetter this morning for Saturday", US Commodities said.
"The core dry areas are expected to receive a bulls-eye on
As weather service MDA put it "light and scattered showers
are expected to develop tomorrow, continuing through Saturday", and in so
doing, "provide limited relief from dryness, especially in Buenos Aires".
In the six-to-10 day outlook, "heavier and more widespread
rains should lead to more significant improvements in soil moisture".
OK, WxRisk.com noted that the GFS model "still does not
bring significant rains into Cordoba Buenos Aires or La Pampa" in the six-to-10
And both the European and the GFS models "insist that things
will turn significantly drier in the 11-to-15 day period, and that there is no
second rain event follow-up to these rains".
But it was not enough to prevent investors removing further
weather premium, especially when parts of more northerly Brazil, which have
been unduly wet, look like turning drier, allowing the early soybean harvest to
speed up a bit.
"Drier weather across northern Brazil over the next several
days will allow soybean and first crop corn harvesting to make better progress,"
'History of walking
The news was not all bearish, with investors getting
reminders of Brazil's logistical shortcomings.
Benson Quinn Commodities noted talk of "boats lining up in
Brazil, with Carnival holiday seen pushing wait times out near 45-days".
At Alllendale, Paul Georgy said: "We are now hearing talk that
Brazilian port workers are going to strike starting on February 19.
"They have a history of walking out at a time when the world
And Michael Cordonnier, the respected crop scout, cut by 1m
tonnes to 50m tonnes his forecast for the Argentine soybean crop.
However, not so positive was talk of a huge overhang of
Argentine soybeans not yet sold, as farmers wait for an expected currency
The idea of better weather undermined corn futures too, as did the prospect of a rise back above 2bn
bushels in US stocks of the grain at the end of 2013-14, as outlined on Monday in
the US Department of Agriculture's so-called baseline forecasts.
"Trade is turning its sights to new crop, with the USDA
releasing its long-term baseline projections yesterday, with US stocks expected
to climb on return to normal weather and trend-line yields," Benson Quinn
At Country Futures, Jerry Stowell flagged a negative to all
markets from the fact that "Barclays announced today that they will no longer
trade the ag commodities.
"That news, along with sloppy demand news, is a major
pressuring factor as well."
moisture a bit'
And wheat was
hardly a help in being undermined again by moisture for drought-hit Plains area
where seedlings have struggled.
"Snow should develop across western Oklahoma, north western Texas,
and south western Kansas today, with rain expected in eastern Texas and eastern
Oklahoma," MDA said.
"Snow in south western areas today will improve moisture a
bit once it melts."
There was actually some positive news on demand, with Jordan
buying 50,000 tonnes of optional origin wheat at tender, apparently for $380 a
tonne including shipping, and South Korea's Major Feedmill Group purchasing
55,000 tonnes of wheat, and Bangladesh 50,000 tonnes.
But with the last two orders thought to have gone to India –
if not a 23,100-tonne order by South Korea's Daehan Flour Mills which went to the
US – the deals had limited impact on supporting Chicago prices.
Wheat vs corn
Nor did they do much to help Paris wheat, which for March ended
down 1.8% at E241.75 a tonne, the lowest finish for a spot contract in seven
London's May lot ended down 1.9% at £203.85 a tonne, the
contract's weakest finish since October.
Traders at a major European commodities house noted that,
for new crop at least, "cheap Black Sea corn continues to displace wheat in the
With a heavier EU wheat harvest in the offing, "this could
pressure prices further in coming months if /when the corn gets planted".
Among soft commodities, New York arabica coffee for May managed a recovery from a 32-month low,
recovering from 141.25 cents a pound, the lowest for a spot lot since June
2010, to close at 143.25 cents a pound, a gain of 0.2% on the day.
"Outright prices have largely stayed within a 4-5 cent range
and, despite breaking out and making a new low for the year, the 139.00 cents-a-pound
support held firm and rejected the further advances of the shorts, rallying all
the way back to the top of the range," Sucden Financial said.
However, New York saw
sugar for March ended down 2.0% at 18.08 cents a pound, within an ace of
its own two-year low.