So much for that end-of-quarter, end-of-month malaise oft
talked about as a dampener on agricultural commodity markets.
OK, it was not such a star session for soft commodities,
where New Year raw sugar for October
edged 0.1% lower to 19.58 cents a pound, amid fears of huge deliveries against
the contract, now in its expiry process.
These seem realised, with deliveries at more than 11,700
contracts, or approaching 600,000 tonnes, according to after-the-bell chatter.
The better-traded March lot managed a gain of 0.1% to 20.42
cents a pound.
And New York coffee
eased 0.4% lower to 173.50 cents a pound for December delivery, with the market
already having factored in Brazil's approval of an extra R$600m ($296m) for storing
beans, a move expected to reduce the pressure to sell on the open market.
The mediocre performance reflected outside markets where stocks struggled too, amid fresh
concerns over the eurozone, while the safe haven of the dollar gained 0.4%, so
making dollar-denominated assets including many commodities less affordable to
buyers in other currencies.
But grains and, eventually, oilseeds were separated from
macroeconomic factors by US crop inventory numbers which continued the
tradition of surprises.
This time, the surprise was a price positive one, after the
US Department of Agriculture said that wheat inventories as of the start of the
month were well below market expectations, and corn stocks at 988m bushels, also
well below analyst forecasts.
US crop stocks, Sept 1, change on year and (on market forecast)
Corn: 988m bushels, -140m bushels, (-125m bushels)
Soybeans: 169m bushels, -46m bushels, (+38m bushels)
Wheat: 2.103bn bushels, -175m bushels, (+38m bushels)
Sources: USDA, ThomsonReuters poll
The data implied that usage over the three months since the
previous data was stronger than had been forecast despite it being a period
when prices were elevated, and in the case of corn hit a record high.
"Prices did not have the effect on demand that the market
thought," Sal Gilbertie, president of exchange traded funds group Teucrium
New crop vs old
It has to be said that stocks data, as single data points, are
difficult to analyse, and open to misinterpretation – for example, in confusing
old crop with new in inventories.
But if there is any confusion, it would appear to be that
the stocks data give an unduly rosy picture of inventories, given that some
1.2bn bushels of this year's corn had been harvested by the start of this month,
giving plenty of opportunity for substituting new crop for old in, say, feed
Crop prices at close
Chicago corn (December): $7.56 ¼ a bushel, +5.6%
Chicago wheat (December): $9.02 ½ a bushel, +5.5%
Paris wheat (November): E266.75 a tonne, +3.0%
Paris wheat (November): £202.75 a tonne, +2.5%
Chicago soybeans (November): $16.01 a bushel, +1.9%
Chicago live cattle (December): 124.60 cents a pound (-0.5%)
Certainly, the data were taken as positive.
"At a minimum, this morning's data offers a great
opportunity for these markets to post a correction of the recent break," Benson
Quinn Commodities said.
And this was all before the International Grains Council came out with its own statistics which, in cutting forecasts for world wheat and
corn harvests and inventories below USDA estimates, only fanned the flames.
'Reverse the downward
Indeed, there was plenty of comment that Friday could turn
out to be a bit of a watershed.
"Expect the recent pattern of fund selling in corn and wheat
to be over for the time being," Benson Quinn said.
Rabobank said: "We expect today's report to reverse the
downward trend across the grains and oilseeds complex which began in early
Corn prices "have the most upside as a result of this
report, with higher prices in wheat also likely".
'Seasonal low is in'
At Country Futures, Darrell Holaday said: "These markets
were ripe for this type of move. They were extremely oversold and the selling
had become rampant in the last several days.
"A neutral corn number would have pushed the market higher.
"If corn closes strong today, up $0.25 a bushel or more,
then one would certainly feel that the seasonal low is in."
In fact, Chicago's December corn contract closed up the exchange
maximum of $0.40 a bushel at $7.56 ¼ a bushel, a gain equivalent to 5.6%.
That was just ahead of wheat, which added 5.5% to $9.02 ½ a
bushel for December delivery.
"Bottom line—lots of action today for a crop report which we
thought would be a yawner," Richard Feltes at RJ O'Brien said.
If there was a difficulty traders faced, it was in getting a
handle on the soybean stocks data, which came in at 169m bushels, well above market
expectations of a 131m-bushel figure, and on the face of it a price-negative
However, the figure did factor in an upgrade for last year's
harvest of 38m bushels.
"Soybean stocks appear bearish, but price downside will be
limited as demand remains strong," Rabobank said.
"While the higher stock levels do not warrant prices pushing
to new highs in the coming months, the report does confirm the historically
tight supply situation."
'Very likely find
Benson Quinn Commodities took a more bullish spin, saying
that "with corn and wheat performing well, the spec should be very careful
pressing soybeans near these levels.
"The fund may have more soybeans to liquidate. But
commercial/end users can very likely find value near these levels."
And Country Futures' Mr Holaday pointed out that "it is not
hard to get through" the extra 30m bushels.
In fact, the USDA announced through its daily export alerts "that
China bought 180,000 tonnes of US soybeans yesterday. There is 6.5m of the 30m
Soybeans, while falling strongly early on, recovered to
close 1.9% higher at $16.01 a bushel.