Have sellers in grains and oilseeds misplaced a little of
futures showed some resilience after their poor performance in the last
session, which some investors feared had opened up the oilseed to a typical seasonal
tumble, known as the "February break".
Chicago's March soybean contract closed down, but only by 1
cent at $12.79 ½ a bushel – a two-month closing low, for sure, but well above
the low of $12.72 a bushel reached earlier.
to close higher, up 0.7% at $419.40 a short ton for March, although soyoil, the other main soybean
processing product, fell 0.7% to 37.84 cents a pound, undermined by weakness in
futures in rival vegetable oil palm oil.
Palm oil for April dropped 0.5% to 2,574 ringgit a tonne in
Technically, soyoil futures are "trading in a narrow, upward
trending trading range that may prove to be a bear flag", Anne Frick at New
York-based Jefferies Bache said.
There was some sign of cracking in both of the fronts that
soybeans were attacked on in the last session, driving prices down more than 2%.
On the Argentine weather issue, sure, the country, which has
been beset by unduly hot and dry weather, will receive some relief.
In the one-to-five day outlook, "the European and the GFS weather
models show significant rain and thunderstorms over 70% of Buenos Aires
province of 1-3 inches, and 1.0-1.5 inches over 50% of Cordoba, the southern half
of Santa Fe and southern Entre Rios", WxRisk.com said.
"On the other hand, the models continue to show that the
western half of central and northern Argentina will see only moderate or light
rains over the next five days, with amounts under 1.0 inch."
Meanwhile, the six-to-10 day outlook, was looking hotter.
"Yesterday there was no hint at all that the heatwave is
going to make a comeback in Argentina," the weather service said.
"The model data is a little different today. The European
and the GFS models clearly showed the heatwave in the south central Atlantic
Ocean building back into eastern and south eastern Brazil, and then eventually
into northern and central Argentina."
At least, for row crop bears, "this will cause a new round
of significant thunderstorms and steady rain over Entre Rios, Corrientes all of
Santa Fe, the northern half of Cordoba and all of Santiago del Estero".
Brazil vs US
The other main concern is of Chinese buyers cancelling
orders of US soybeans and switching to South America – a threat enhanced by a
strong start to Brazil's harvest, and ideas that lower volumes of corn exports
will allow the South American country to avoid logistical hiccups this year.
Darrell Holaday at Country Futures reported a "strong indication
that China cancelled three cargos of US soybeans yesterday and moved them to [origin]
"The current price in the US is $0.85 a bushel over the
Paul Georgy at broker Allendale said: "There is continued
talk of China beginning to shift soybean shipments from US to Brazil.
"Basis levels will provide an advantage to buyers going to
Brazil in a few weeks."
However, there was no confirmation of the cancellations.
"The market will be looking for confirmed cancellations from
China," US Commodities said earlier in the session.
"If the rumours do not materialise, the soybean market may
be setting up for an oversold bounce."
And even if the cancellations do prove true, 165,000 tonnes
represents only a small portion of the 8.0m tonnes of unshipped Chinese orders
from the US as of January 9.
Furthermore, although Celeres estimated that Brazilian
farmers had sold just 42% of their soybean crop, down from 56% a year ago,
indicating more in the way of unfulfilled selling pressure, US growers have
done better, with 60-70% of their crop priced, according to US Commodities.
That is more than the 40-50% of their latest corn crop that
US growers have sold, again implying unfulfilled selling pressure.
Still, it is also propping up the US cash market for corn,
in which weather is a factor too, in that cold temperatures are seen disrupting
"The corn market has been supported by stronger basis levels
as cash merchandisers need some grain and they are finding an uninterested
producer given the cold temperatures in the Midwest," Country Futures' Darrell
At RJ O'Brien, Richard Feltes flagged the boost to grain
prices from "a cold Midwest weather pattern that may slow grain movement
through late February."
The market forces were not all positive, with Mr Holaday
also flagging a negative to the corn market from a downturn in ethanol prices, which
tumbled by 1.1% to $1.789 a gallon in Chicago, for March delivery.
That extended above 6% losses from a January 13 high of $1.917
The margin for ethanol producers "is collapsing", he said.
Still, corn for March closed up 0.3% at $4.26 ½ a bushel,
regaining, just, its 10-day and 20-day moving averages.
was a mixed bag.
Higher protein wheat did well, lifted by the US winning
50,000 tonnes of a 350,000-tonne order by Iraq of hard wheat, with 200,000
tonnes going to Australia and 100,000 tonnes to Canada.
Furthermore, concerns about crop damage from the US weather remain
alive, at least for some southern areas of the US – hard red winter wheat
"Dry conditions in the Plains starting to get the attention
of an oversold futures market," Mr Holaday said, with dryness meaning less protection
from cold temperatures, besides less moisture in the soil when the spring
growing season comes.
'Little snow cover'
US Commodities flagged price support from "signs that winter
crops in the US will not have enough snow cover to insulate them from damage if
"While areas of the eastern US contend with winter storms
today, much of the Great Plains, including top winter-wheat grower Kansas, has
little snow cover."
Hard red winter wheat for March closed up 0.6% in Kansas City
at $6.25 ¼ a bushel.
In Minneapolis, hard spring wheat for March ended up 0.5% at
$6.13 ¾ a bushel.
Paris vs Chicago
But soft red winter wheat for March fell in Chicago, by 0.2%
to $5.61 ¼ a bushel, despite a relatively positive note from Standard Chartered, hurt in part by ideas of sufficient snow cover in the
Midwest, its core growing area.
Furthermore, the US missed out on a 500,000-tonne milling
wheat order by Algeria, thought to have gone to France, a rival supplier of
Certainly, Paris wheat for March performed better, adding
0.4% to E193.00 a tonne for March delivery.
London wheat, caught between Paris strength and the depressant
of a firmer pound and, remained unchanged at £151.75 a tonne.
Out of favour
Among soft commodities,
raw sugar futures dropped below 15 cents a pound for the first time since
June 2010, depressed by continued expectations of ample supplies in 2013-14.
While Australia & New Zealand Bank cautioned investors against getting too bearish on sugar, with dryness potentially an issue in
Brazil, and hedge funds looking to have limited selling pressure left, Sucden
Financial cautioned that change in sentiment may be unlikely, at least before
next month's Dubai conference.
Raw sugar for March ended down 1.3% at 15.03 cents a pound,
having hit 14.97 cents a pound earlier.
A weaker Brazilian real, down 0.7% against the dollar to
R$2.37 to $1, did little to help, pressing too on arabica coffee, which for March closed down 1.1% at 114.85 cents a
pound in New York.