So did the last session's turnaround in grain and oilseed
prices mark the start of something sustainable?
No, to judge by early deals on Monday.
A strong year for the likes of corn, soybeans and wheat looked set to end of a weak note,
with the grains dipping back towards multi-month lows.
Eleventh hour US
It was little help for many markets that US politicians have
still to reach agreement on a budget to avoid the country falling over the "fiscal
cliff", with senators on Monday to start their latest effort at reaching a
That uncertainty went a long way to cancelling out the boost
to macroeconomic sentiment from strong Chinese manufacturing data.
HSBC's China manufacturing purchasing managers' index rose
to 51.5 in December from 50.5 in November, and reaching its strongest reading
since May last year.
While Chinese shares
and London copper (China is a huge
importer of the metal) managed gains, stocks on other Asian markets struggled,
as did many other commodities. Brent crude
was 0.2% lower.
But Chicago agricultural commodities displayed all the vigour
of crops in which funds appear in determined selling mode, whether prompted by
end-of-year cash raising, or fundamental factors.
Regulatory data late on Friday highlighted the extent of
their gloom, with managed money, a proxy for speculators, again increasing its
net short position in Chicago wheat
futures and options, to 11,899, the biggest in seven months.
(Net short positions indicate more short bets, which profit
when values fall, than long ones, which profit when prices rise.)
In Chicago corn, managed
money cut its net long position by 35,522 lots to 140,109 contracts, the lowest
for nigh on six months, while the net long in soybeans was cut by nearly 21,000 contracts, to 109,007 lots.
The extent of selling could ultimately prove supportive, if
it prompts ideas that it has gone too far and sparks hedge funds to turn long
"Besides the competitiveness of US wheat in the global market, I also view the fact that all three US wheat
markets are extremely oversold as a supportive factor going forward," Brian
Henry at Benson Quinn Commodities said.
"However, the potential bull may be wise to see how this
plays out after the first of the year as more upward momentum is needed to
shift daily and weekly momentum studies from negative indicators."
Indeed, early January will bring index fund rebalancing, in which
funds sell the best-performers of 2012 and buy the laggards, so adjusting their
portfolio weightings back to those of the index they track.
That means selling in the likes of Chicago wheat, which remains
a leading performer of the year.
'Rallies hard to
So it was the late softness in the last session which was
more a guide to direction in early deals than the positive closes.
"Wheat did bounce nicely on Friday, but rallies have been
hard to sustain," Mike Mawdsley at Market 1 said.
For wheat, down 1.1% at $7.70 ½ a bushel at 08:30 UK time
(02:30 Chicago time), the decline came despite more signs of import demand,
with Iraq tendering for the grain, at a time when US supplies are around the
cheapest in the world.
Indeed, data on Friday showed US weekly wheat export sales
at more than 1.0m tonnes, their highest in nearly two years.
"Weekly export sales were over twice the amount, 425,000
tonnes, that needs to be averaged to meet the US Department of Agriculture's current
projections of 1.05bn bushels."
'Stuck in a repeating
For the row crops, one of the key price influences at this
time of year, South American weather, was mixed, with central and northern Brazil
looking dry, a potentially unhelpful sign, but Argentina, which has had too
much moisture, drying out too.
"The weather pattern appears to be stuck in a repeating
cycle over South America," weather service WxRisk.com said.
"The weather models continue to keep the heat dome centred
over much of central and east central Brazil, which means that eastern portions
of Mato Grosso, Goias, Tocantins, Bahia and, Minas Gerais stay pretty dry over
the next seven-to-10 days.
"On the other hand a
series of fairly strong systems moving to the jet stream will bring significant
rain almost every day to portions of Paraguay, Mato Grosso do Sul, Sao Paulo, Santa Caterina and Rio Grande do Sul".
At Benson Quinn, Kim Rugel said: "Brazilian soybean production
estimates range from 80m to 84m tonnes with weather for north eastern Brazil over
the next couple weeks determining whether the crop is on the high end of low
end of estimate range.
"Analysts have been lowering Argentine production estimates
which range from 50m to 55m tonnes, with the USDA at high end of range.
"Excessive rains during December which brought flooding in
some key producing regions have delayed planting, and have trade looking for
lower production due to lower yield potential on late-planted beans."
Soybeans for March dropped 0.7% to $14.09 ½ a bushel, while
corn for March fell 0.2% to $6.92 ½ a bushel.