Wheat still wasn't
At least, that what investors reckoned on Friday, with Chicago's
benchmark March wheat contract ending down 1.6% at $5.63 ½ a bushel – the
lowest finish for a spot contract since July 2010.
The trouble was, well, there appeared no reason to buy.
"Markets continue their grind lower in the absence of any
fresh supportive news which is giving market bears the confidence to test even
lower levels," UK co-operative Openfield said.
"The market is unlikely to garner any support from consumers
who continue their policy of buying hand to mouth only to then disappear into
the long grass anticipating prices will continue downwards."
'Add to the bearish
Grain merchant Gleadell said: "There are very few global
weather concerns that look likely to spook the market – at least in the short
"A severe cold snap is again forecast across the US Midwest
for the final week in January, with temperatures likely to drop to minus 20
degrees Celsius, yet ample snow-cover protection is largely in place with more
expected to fall over the coming week."
And what snippets of news there were were generally negative
"Reports out of India continue to add to the bearish
sentiment for the wheat markets," broker CHS Hedging said.
"Large stocks coupled with anticipating a seventh straight
large crop should continue to add to pressure on wheat," the broker said, restating
talk of a harvest above 100m tonnes "which will exceed domestic demand
increasing the amount for export".
In fact, there was one positive for spring wheat, with
Informa slashing its forecast for US sowings this year by nearly 1m acres to
And little wonder given the 7% drop in Minneapolis spring
wheat futures for December 2014 over the past month, compared with a 1% all in Chicago's
December 2014 corn contract.
North Dakota farmers' switch to corn may move up a gear,
with Informa listing its estimate for US corn sowings by 1.4m acres.
Minneapolis spring wheat futures for March actually
outperformed their Chicago peer, but still fell 1.0% to $6.17 ¾ a bushel.
Of course, Informa's upgrade to the corn plantings forecast was hardly good for prices of the yellow
Nor were improved forecasts for weather in Argentina, where
some corn is in the heat-sensitive pollination period.
Darrell Holaday at Country Futures noted: "The EU and GFS
weather models generally came together this morning for central Argentina.
"The GFS model generally moved toward the EU model, which
has been promising more rainfall."
'Relief to stressed
CHS Hedging said: "The confidence in rainfall early next
week for Argentina has specs positioning ahead of a long weekend," noting that the
front "is expected to give us 70-80% Argentine coverage with 1-1.5 inches.
"If this storm does develop over the right areas it will
give relief to stressed crops that have been, and will be, battling 100 degree
Fahrenheit temperatures through Sunday."
That, and wheat's weakness, offset any bullish feeling from
the purchase by Taiwan of 60,000 tonnes of US corn, while Egypt bought 200,000
tons of US corn for 2013-14.
Chicago corn for March ended down 0.9% at $4.24 a bushel.
It was left to soybeans
to keep bulls' hopes alive, with the March contract nudging 0.1% higher to $13.16
½ a bushel.
Informa helped by reducing its estimate for US soybean acres
by some 600,000 acres to 81.3m acres.
That helped the oilseed resist some apparent selling
One broker noted that, for the last session, "it was
interesting to see that the number of open soybean contracts increased by
"This was on heavy bear-spreading which may indicate where
the positions are being built, short March-long November."
The November contract actually did outperform a little,
adding 0.3% to $11.25 a bushel.
Many soft commodities struggled too, although not cotton, despite bearish comments from Morgan Stanley and an upgrade by some 800,000 acres to 10.9m acres in the Informa
estimate for US plantings of the fibre.
That was still below the 11.0m acres suggested by a Reuters
poll earlier this month.
Cotton for March ended up 0.7% at 86.80 cents a pound, the
best finish for a spot contract in nearly five months.
Waning fears, for now, over a Chinese revamp of its
agriculture policy has also been helping the fibre.
But cocoa dropped
2.3% to £1,717 a tonne in London, for May delivery, after North American cocoa
grind data for the fourth quarter of last year came in below expectations,
countering talk of strong North American chocolate demand from the likes of sector
giant Barry Callebaut.
The grind rose by 4.4%, below an increase of at least 5%
forecast by investors.
New York cocoa for March shed 1.9% to $2,700 a tonne.
Raw sugar for
March dropped 1.5% to 15.22 cents a pound, a three-year closing low, undermined
by continued ideas of ample supplies.
"In the short term, favourable Northern Hemisphere crushing
should help boost the global production surplus, forcing further spot discounts
to help find homes for the excess inventories," Morgan Stanley said.