Wednesday brought a brighter day, after the jitters earlier in the week prompted
by disappointing US jobs data.
Tokyo stocks, which tumbled 3.1% on Tuesday,
rebounded 2.5%, with Sydney stocks recovering 0.6%.
But for grain
investors, there was little to cheer in early deals, when prices extended their
losses of the last session.
However feebly the
index fund rebalancing process (expected to have closed on Tuesday) seems to
have behaved in terms of providing support for grain prices – wheat futures were down 4% over the
week, and corn rose only thanks to surprise
US inventory data – would its ending mean enhanced pressure?
futures for March were down 0.2% at $5.78 ¼ a bushel in Chicago as of 09:45 UK
time (03:45 Chicago time), amid ideas that while the worst may be past for now,
reasons to buy are not that compelling.
And, after all, the
contract had already risen for two successive sessions – a feat not managed
positive sessions, well, that has not been witnessed for three months.
There is "nothing
bullish about the new crop US and world wheat supply and demand outlook",
Richard Feltes at Chicago broker RJ O'Brien said, although he acknowledged
support to prices from cold and dry weather in the US, and ideas of continued Brazilian
"Wheat lows may be
in short term until the market accesses the late-January Artic blast and the
extent of follow-up Brazil buying," he said.
Jonathan Watters at
Benson Quinn Commodities also clocked "late session chatter about dry
conditions in the southern US Plans and cold temperatures next week".
But the "Brazil
story" appeared to him to carry more weight, with the South American country
needing 7.7m tonnes in 2013-14, according to the US Department of Agriculture,
and Argentine supplies, while permitted to some extent this week, hardly
"In the absence of
the shipments from these two countries," Argentina, Paraguay too, "Brazil is
turning mainly to the US for its milling needs," the US Department of
Agriculture said in a report overnight.
"By the beginning
of the new year, Brazil had purchased more than 3.0m tonnes of US wheat.
Reduced competition in South America is enhancing US wheat export prospects."
In fact, while
Kansas City-traded hard red winter wheat futures for March maintained a little
of their recent outperformance, being the variety mainly imported by Brazil,
and grown on the frost-threatened southern Plains.
Kansas City wheat
for March eased 0.1% to $6.31 ¼ a bushel.
'Reduced pressure to import'
Corn fell too, by 0.2% to $4.30 ¾ a bushel for March delivery, under
pressure from fresh talk of Chinese rejections of distillers grains (DDGs), the
byproduct of corn ethanol production used as a feed ingredient.
authorities had appeared to be more relaxed over DDGs than corn itself over
containing a genetically modified variety unapproved in Beijing, such
observations have been challenged by talk of two fresh cargoes being turned
The USDA commented
overnight that "the record large corn crop in China reduces pressure to import
corn, and rejection of some import shipments could help the government sustain
high internal corn prices", under pressure from a large 2013 harvest.
The USDA last week
raised by 6.0m tonnes to a record 217.0m tonnes its estimate for China's corn
harvest last year.
'Hot and dry weather'
At least, from a
bulls' perspective, the March contract is holding just above its 50-day moving
average, which it closed over on Tuesday for a third successive session for the
first time since June.
Indeed, row crops
are getting some support from concerns over Argentina's weather, even if Brazilian
conditions appear benign.
"Hot and dry
weather in Argentina during the critical [corn] pollination stage has many
watching weather patterns and upcoming forecasts," CHS Hedging said.
in the southern areas are expected to reach the upper 90s to low 100s
'Increase the risk to corn'
At Commonwealth Bank
of Australia Luke Mathews said: "A renewed drying trend in southern
Argentina is reducing the potential size of the country's corn crop.
"This may lend some support to global prices."
And At Jefferies
Bache, Anne Frick flagged that "a new round of extreme heat continues to
develop and should last into Saturday.
increase the risk to corn, especially pollinating corn."
However, it is soybeans which are managing to find
more support, with Benson Quinn Commodities highlighting "the prospects of
additional crop stress in Argentina".
"Due to less than
favourable conditions, private forecasters have lowered their sights on
Argentine soybean production."
are being helped by ideas of a strong US crush number for December due later on
Oilseed Processors Association is expected to show volumes at about 163-164m
bushels, potentially hitting a record high.
Soymeal, one of the two main soybean processing products, is also under the
microscope, with China's rejection of US DDGs, a rival protein source in feed,
potentially heightening competition in the US market on this score.
Still, as a twist
on this theme, lower volumes of DDG imports may raise the need in China for
soymeal, improving crush margins and the appetite to import soybeans themselves.
Whatever, on the
Dalian exchange in China, the top soybean importer, soybeans for May added 0.7%
to settle at 4,644 yuan a tonne, while soymeal for May settled up 1.1% at 3,364
yuan a tonne.
In Chicago, soymeal
for March was unchanged at $430.10 a short ton, while soybeans for March were also
unchanged at $13.07 a bushel.
commodities, raw sugar maintained
its downswing, falling 0.3% to 15.45 cents a pound for March, just 0.04 cents
from matching the three-year low for a spot contract, after the resilient
Brazilian Centre South production data on Tuesday.
Cotton for March added 0.5% to 84.16 cents a pound despite data showing that
Chinese cotton imports fell 19.2% to 4.15m tonnes in 2013.
Such a decline had
been expected, with many having earlier last year forecast a deeper decline.