Once again, a relatively calm performance by the CRB
commodities index, which eased 0.2%, defied greater volatility in ags.
But this time it was soft commodities which clocked up the
gains – for now, at least - while oilseeds and grains succumbed to a "stale news
New York raw sugar
for March set a two-year low, for a spot contract, of 18.06 cents a pound in
early deals only to recover to end at 18.50 cents a pound, a gain of 2.1% on
While acknowledging the depressant to prices from better-than-expected
Brazilian sugar output in 2012-13, Standard Chartered analyst Abah Ofon flagged
a "high risk of further demand pressure on China's domestic sugar stocks.
"In our estimation, the market is not sufficiently pricing
for supply risks in 2013.
"We believe sugar prices are now hovering at the marginal
cost of production which implies current levels are a good support," Mr Ofon
Nick Penney, at Sucden Financial also clocked technical support
for the sweetener, in which speculators have already undertaken a stack of
liquidation, besides the approach of the 17.50-cents-a-pound level at which it
becomes more profitable for Brazil's mills to turn cane into ethanol instead of
"Whilst remaining overall bearish in the medium term, we are
mindful of the market being oversold, of physical differentials firming, and of
a substantial if not record short position" expected in forthcoming regulatory
data, he said.
'Lower prices spark
New York arabica
coffee for March recouped some of their losses of the last session too, rebounding
by 1.2% to 150.40 cents a pound, amid some profit-taking on short positions, but also some hopes for consumption.
"Differentials in Brazil and Colombia are rising as lower
prices spark demand," Societe Generale noted.
However, the bank nonetheless attributed futures a mildly
bearish rating, noting rising New York inventories, while Somar hardly did
bulls a favour by flagging the benefit of recent rains to Brazilian
plantations, where low rainfall last month had triggered some fall of immature
"With the return of moisture, the plants and the fruit
returned to developing satisfactorily," the consultancy said, flagging improved
prospects in parts of Sao Paulo, Parana and, in particular, Bahia, which has
been in the grips of drought.
New York cotton
for March defied some cautious comment too, from Australia & New Zealand Bank,
to recover early losses and close 0.7% higher at 80.48 cents a pound, a fresh
seven-month high for a spot contract.
'Stale news flow'
However, grains and oilseeds showed no such resilience,
giving back some of their recent gains, in part because of nothing – that is,
no fresh news around which to build a bullish case.
"Ag markets are leaking, with a stale news flow
overshadowing the continued concern over net drying across southern Brazil and
Argentina," Richard Feltes at RJ O'Brien said.
Furthermore, "nothing was reported on daily sales update
today" from the US Department of Agriculture, which reports any major crop export
deals, which traders are obliged to report.
This lack of export alerts "undermined rumours that China is
booking February/March US soybean
cargoes", Mr Feltes said.
In fact, there was some movement on the dry Argentine
weather outlook which has been a major support to row crop values of late.
"The weather this morning is slightly improved," US
Commodities said, noting forecasts that half of Argentina is in for rainfall in
the six-to-10 day window.
"At the end of this period about one-third of the area will
remain dry versus an estimate of 50% yesterday."
Darrell Holaday at Country Futures said: "There is a fast-moving
front that will move through on Thursday and Friday and that has taken some of
the momentum out of today's trade."
Meanwhile, the technical picture has deteriorated too.
Chart watchers in soybean took fright after Chicago's March
lot foundered at its 75-day moving average in the last session, closing just
below it (and further beneath it on Wednesday).
Corn suffered a similar setback in the last session, and
added to its problems this time by closing back below its 50-day moving
average, at a little over $7.32 a bushel.
It also faced a downbeat note from Societe Generale, which cautioned that high prices were rationing demand from US livestock farmers more than investors have appreciated.
In fact, corn did worst of Chicago's big three, ending down
1.1% at $7.20 ¾ a bushel, while soybeans for March ended down 1.0% at $14.37 a
But then soybeans did gain some strength from the Brazilian
rains which, even if welcomed by coffee farmers, are not so opportune for
attempts to boost early harvest volumes and meet demand from importers which
have for months been forced to pay up for dwindling US supplies.
In fact, Agroconsult cautioned that the waiting time for
vessels expecting to load up in Brazil next month could approach 45 days.
Benson Quinn Commodities said: "The availability of early
soybeans out of Brazil remains in question."
Wheat vs corn
That left wheat
the strongest of a weak Chicago bunch, in falling 0.6% to $7.74 ¼ a bushel for
It gained some support from its relatively low premium over
corn, which it can replace in some functions, such as feed, in which it is
considered a modestly more nourishing choice.
Furthermore, there are some concerns that the latest wave of
Australian heat and dryness could hurt prospects for the next crop, although this
has yet to be sown.
'Barometer for demand'
That, said "the US export picture for grains is weak and
last week's European Union exports were comparably light too," Rory Deverell at
"The trade will now look to tomorrow's EU export licenses
statistics as a barometer for demand and direction."
US wheat export sales are 12% down year on year, despite the
low levels of stocks in many rival exporting countries (although that declines
pales against the 56% drop in US corn export sales).
In Europe, Paris wheat for March closed down 0.6% at E251.50
a tonne, although London's May lot managed to close unchanged at £216.00 a