Sentiment on broader financial markets was generally
sanguine on Tuesday, amid hopes that a resolution to US budget disagreements
can indeed be found.
President Barack Obama is reported to have offered concessions
including on a position that tax rises should kick in at income levels of
$250,000, and on a quest for a permanent mechanism to raise the US debt limit.
Shares closed up
1.0% in Tokyo, while gaining ground on opening in Europe too.
edged higher, while Brent crude
added 0.5% to cross back above $108 a barrel.
However, the mood in agricultural markets was less upbeat,
if only because Christmas appears already to have arrived, injecting a certain
lack of urgency and volume into the market.
"The holiday mode appears to be with us," Brian Henry at
Benson Quinn Commodities said, flagging also "limited" selling by producers "despite
solid gains last week and firm basis levels".
At RJ O'Brien, Richard Feltes said that "we are reluctant to
read too much into pre-Christmas price behaviour on ag markets".
'Weather still looks
It was especially difficult given the difference of opinion
over the South American weather outlook, a key potential market mover at this
time of year, when corn and soybean crops are at varying stages of development.
"South American weather still looks favourable," Mr Feltes
said, flagging a longer-term outlook from Commodity Weather Group that turned
slightly wetter for Brazil, what is needed, while looking drier for Argentina,
which has had more than its fill of rain.
Mr Henry said that the "overall weather pattern for South
America remains favourable," but added that "a drier trend that is developing
in northern regions of Brazil and the return to wetter pattern in Argentina will
get some attention from the trade".
'Massive heat dome'
And WxRisk.com issued a far more downbeat view, from a
producers' perspective, saying that "weather models are developing another
massive heat dome over much of southern and east central Brazil, which will
keep all of these areas rather hot and dry over the next five days.
"This will cause cold fronts over Argentina to stall, and
the models over the next five days show 1-4 inches of rain with 70% coverage
over most of central and northern Argentina.
"In the six-to-10 day outlook, the heat dome holds over
central and east central Brazil so these areas stay dry," while southern parts
and Argentina are in for rain.
Major winter storm?
For the US weather outlook, there was more agreement that
rain and snow which had been forecast for dry US hard red winter wheat areas may
not reach southern Plains areas which need it.
Sure, the US may be on for a Christmas marked by a "major
winter storm for the central and lower Plains and most of the Midwest south of
interstate 80," WxRisk.com said.
"However, it's quite possible that the blocking pattern over
central and eastern Canada may not be that strong," meaning that the "lower
Plains and the Delta would stay warm and dry".
At Country Futures, Darrell Holaday said that the weather
models have" pushed the brunt of the moisture to the east and southeast, which
is similar to the recent pattern of storms.
"It is still showing up, but the moisture intensity has
definitely been shifted east."
Below the 200-day
Still, that is only of real relevance for the moment to winter
crops such as wheat, already in the
ground, but which remains overshadowed by disappointing exports.
Chicago wheat for March eased 0.3% to $8.05 ¾ a bushel as of
10:00 UK time (04:00 Chicago time).
While a small move, it was enough, signally, to leave the
contract below its 200-day moving average, at a little over $8.09 a bushel, and
beneath which the lot closed in the last session for the first time since June.
Technical indicators often take a higher profile when fundamental
news is thin, or inconclusive, although Argentina seems to be doing its best to
support the grain, with the rain slowing harvest and impairing quality, and
potentially prompting a further cut to the country's export quota.
"Argentinean newspapers have speculated that the Argentinean
government will cut export quotas by another 25% to 3.4m tonnes because of the
poor harvest," Luke Mathews at Commonwealth Bank of Australia noted.
"The reports are unconfirmed but highlight the uncertainty
that exists regarding Argentinean wheat exports this season."
For soybeans, of
course, the demand news has been better, with weekly US export inspections
reaching 37.0m bushels, data on Monday showed.
"Export inspections were impressive for soybeans," Mr
Or were they? "
"Weekly inspections were viewed as disappointing," Benson
Quinn's Brian Henry said, if conceding that "they remain well ahead of what
needs to be done on a weekly basis to meet" US Department of Agriculture expectations
for the full 2012-13.
Turning to technicals, one definite negative from the last
session was what Phillip Futures termed "a lack of follow-through buying" after
the January, and March, contracts returned over $15 a bushel, temporarily as it
With investors appearing to lack the stamina for now to push
the oilseed higher, the January lot eased 0.7% to $14.85 ¼ a bushel, and the March
contract 0.7% to $14.78 a bushel.
Behind the pace
Against that background, corn, for which US exports are most definitely disappointing, stood
little chance of gains, and shed 0.5% to $7.20 ¾ a bushel for March delivery.
Latest US weekly export inspection data of 15.0m bushels were
a big improvement on the 8.0m bushels a week before, but still well short of the
pace needed to meet USDA forecasts.
"Weekly shipments need to average 24.8m bushels per week to
meet the USDAs projected 1.15bn bushels in exports for the current marketing year,"
Mr Henry said.
In New York, soft commodities got off to weak starts too,
with raw sugar for March shedding
0.7% to 19.28 cents a pound, losing some of the momentum from short-covering,
after regulatory data showed speculators holding an unusually negative stance
on the sweetener.
"Temporary short-covering rallies have been a common feature
of the sugar market over the past six months," CBA's Luke Mathews said.
Cotton for March
eased 0.2% to 75.72 cents a pound, after closing the last session at its
highest since late October, boosted by last week's cut by the USDA to estimates
for US stocks at the close of 2012-13, and by firm export data.
"We note that the last assault on 76 cents a pound was
quickly followed by a three week, 9% slump in values," Mr Mathews said.
"While we acknowledge that some of the data since October
has been a little more promising, we still believe that the expected record
large global cotton stockpiles will to pressure prices lower over the next six