Evening markets: US jobs data lifts cotton. Cold helps wheat

It was a good day for equity investors, after decent US jobs data.

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 up 1.0%.

Hot cocoa 

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 its bounce

But gains were harder to come by among grains and oilseeds.

Wheat remained under pressure from the huge upgrade to Canada's crop on Wednesday to a record 37.5m tonnes.

Spring wheat, which forms the bulk of the Canadian crop, was particularly weak, falling a further 0.5% to $6.80 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.

'Cold temperatures and ice'

"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 season.

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 a bushel.

'Not really a factor'

For soybeans, 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 153m bushels.

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 a bushel.

Corn gains

Corn in fact proved the best performer of Chicago's big three, adding 0.2% to $4.34 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 temporary.

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.

Ethanol lobbying

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 trade talk.

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."

Morning markets: wheat stages some revival amid US cold snap
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