It was a good day for equity investors, after decent US jobs
Non-farm payrolls rose by 203,000 last month, easily beating
expectations, while the jobless rate fell to a five-year low of 7.0%.
And share markets looked on the bright side, a recovering US
economy, rather than the increased threat of a tightening in US monetary policy
that the upbeat data might mean.
The Dow Jones Industrial Average stood 1.2% higher in late
deals, if not getting back to record levels.
In Europe, London stocks closed up 0.8% and Frankfurt shares
For agricultural commodities, headway was not so easy, in
these times post the "risk on, risk off" days in the aftermath of the global financial
crisis, when rising, or fall, tides moved all boats.
Cotton, which as
an industrial commodity tends to move more in line with broader market
sentiment than food crops, did jump 2.0% to stand at 80.41 cents a pound for
March delivery in late deals in New York.
Retreating stocks certified for delivery against New York
futures helped too.
And cocoa managed
healthy gains, soaring 1.7% to $2,803 a tonne in New York for March delivery,
back near to two-year highs, as the concerns over the world deficit resurfaced.
Spring wheat loses
But gains were harder to come by among grains and oilseeds.
under pressure from the huge upgrade to Canada's crop on Wednesday to a record
Spring wheat, which forms the bulk of the Canadian crop, was
particularly weak, falling a further 0.5% to $6.80 ½ a bushel in Minneapolis for
March delivery, closing at a fresh contract low.
Winter wheat at least had some help from the poor US weather,
which is provoking fears of some, if not extreme, damage from low temperatures –
with snow cover limiting the threat.
"As much as 15% of the US is vulnerable from aftermath of
ice that won't thaw until Tuesday," Richard Feltes at RJ O'Brien said.
"Cold temperatures and ice are hitting the newly dormant US
winter wheat areas," said CHS Hedging if noting that "the impact will not be
known for months", with damage often not apparent until late in the growing
According to weather service MDA, "ice in south eastern
areas will result in some minor wheat damage.
"Some spotty winterkill is occurring in north western areas."
It was enough to limit to 0.1% the decline in Chicago wheat
for March, which closed at $6.51 a bushel, while hard red winter wheat, particularly
in focus as far as potential winterkill damage goes, ended up 0.25 cents at
$6.95 ½ a bushel.
'Not really a factor'
weather has allowed investors to withdraw some risk premium, with benign conditions
for sowing and early growth in South America.
"Weather is not really a factor in South America at this
time as rain systems move across the crop growing areas every 5 to 7 days,"
said Paul Georgy at broker Allendale.
"South western Argentina is reportedly a bit dry but not a
major impact on the big picture."
Still, export demand is preventing the selling trend going
too far, with US soybean sales for 2013-14 already at 95% of the level forecast
by the US Department of Agriculture for the whole season, compared with an average
of 69% at this period, according to Allendale.
Big data day
Indeed, investors proved reluctant to move soybean prices
too far ahead of the USDA's next benchmark Wasde report due on Tuesday, when
the figure for year-end US stocks is expected to be trimmed by 17m bushels to
As an extra uncertainty, Brazil's Conab bureau will unveil
domestic data too on Tuesday – Brazil already being the top soybean exporter,
and now expected to overtake the US on production in 2013-14 too.
Indeed, the coming of the Brazilian harvest in early 2014
could drastically change trade dynamics, with RJ O'Brien's Mr Feltes flagging "trade
chatter that Brazil soybean offers for the second quarter of next year are getting
close to working into US".
And the US, after all, importer 36m bushels of soybeans last
season, up from a five-year average of 13.6m bushels.
The outcome was a drop in soybean prices in Chicago, but not
far, with the January contract ending down 0.2% at $13.25 ½ a bushel.
Corn in fact proved the best performer of Chicago's big three,
adding 0.2% to $4.34 ¼ a bushel for March delivery.
The grain has been gaining technical support from the
correction of oversold conditions, and from the end of the US harvest and a
reluctance by growers to sell the huge amount they have at prices much lower
than they have got used to.
All this adds up to a squeeze on supplies, if only
This has helped the market ignore the threat of a drop in US
exports to China, after a series of cargo rejections for findings of an unapproved
genetically modified variety.
Might the US Environmental Protection Agency be persuaded
too to row back on plans for such a severe cut to the US ethanol mandate?
At a meeting on Thursday, "pro-ethanol speakers out-numbered
energy/grocery/livestock interests by three to one", Mr Feltes said, noting
He added: "It is interesting to note that pro-ethanol lobby
who one year ago dismissed the notion that a lower ethanol mandate would reduce
corn prices made a strong case yesterday that 'corn prices would decline
dramatically' the if EPA's proposed cut were implemented."