Commodities and markets generally have been given a lift
so far today as China players return from their week long New Year holiday.
The three-month copper
benchmark stood up 0.5% at the time of writing on the London Metal Exchange with
spot gold up by a similar amount in
early European trade.
Equity markets in Asian stood with solid gains by the
close with the Shanghai & Shenzhen CSI 300 Index up 0.5%; Hang Seng Index
0.9% and the Nikkei 225 Index a solid 2.1%, boosted by positive earnings
Currency markets have seen a more mixed start however as
trades take a more cautious stance ahead of today's key non-farm employment reading
for January. Economists predict the US
economy added 185,000 jobs last month; however Wednesday's disappointing
ADP-private sector employment change reading caused the dollar to weaken.
At the time of writing the greenback stood up 0.2%
against the euro, but down marginally again the Japanese yen.
China "holds all
The return of Chinese players brings into question the
demand for US soybeans, with many investors still expecting Chinese importers to
ditch US deals in favour of Brazilian supplies, now the South American
country's harvest is up and running in earnest.
Futures for May
delivery closed up 0.5% on the DaLian Commodity Exchange Friday at RMB 4,712 a
"China "holds all the cards" but thus far has not only
refrained from US soybean export cancellations but in addition continues to add
to old crop soybean purchases," said Richard Feltes at RJ O'Brien.
US export sales were decent at 577,000 tonnes for 2013-14
"up 59% from the previous week and 25% from the prior four-week
average", the USDA said, with a further 219,500 tonnes for next season.
The latest increase takes sales for 2013-14 season to
1.58bn bushels, less than half way through the season, but already above the
1.495bn bushels that the USDA has pencilled in for the whole year.
Don't cry for me
While the harvest in Brazil picks up pace players will be
looking to developments further south as growers in Argentina have been hoarding
soybeans, as a hedge against falling currency.
"Their peso has been collapsing and has resulted in slow
movement of grain as farmers hold out until they need to sell or are confident
that the currency has stabilized, "noted a US broker.
The peso "weakened by a total of 19% in January," noted
the USDA Foreign Agricultural Service recently as they downgraded their outlook
for the countries soybean crop, due to "dry conditions leading to the loss of
second crop soybeans in the western and southern province of Buenos Aires".
The USDA bureau in Buenos Aires lowered its productions in estimate to 54m
tonnes with "average yields lowered due to poor conditions of second crop
A similar downwards revision was made by Informa
Economics last week, who lowered its production forecast for the 2013/14
harvest to 57m tonnes, down 500,000 from its previous figure. The firm however noted the crop would benefit
from "timely" recent rains.
Corn has seen a soft start with March futures current off 0.2% having finished Thursday down 0.25 cents
a pound to $4.43. Futures have met with profit-taking
despite some bumper US export weekly sales data.
"Net sales of 1.70m tonnes for 2013-14 were down 8%
from the previous week, but up 94% from the prior four-week average," the
US Department of Agriculture said.
"Corn consolidates despite much better than expected corn
export sales," US Commodites said.
Players will be looking to Mondays monthly Wasde report amid
expectations the USDA will raise its forecast for US corn exports in 2013-14,
and trim the end-stocks number.
Furthermore, the cold weather looks like keeping on
coming for the US, impeding supply deliveries and so providing support to
Players will be looking to how corn compares with oat prices today, which hit a record
high yesterday and closed above corn in Chicago for the first time in 12 years.
Oat prices have surged after severe railroad delays and
other logistical problems in Canada sent the price of the grain above corn for
the first time in eight year
But can they hold on to their gains?
The latest splurge higher was driven by the threat of a
railroad workers' strike in Canada, which is already struggling with its
logistics, and in delivering south the supplies that US oat consumers rely on.
(The US imports nearly half its oats, with Canada the
March oats hit a record, for a spot contract, of $4.63 ¼
a bushel Thursday before easing to close at $4.56 ½ a bushel, up 3.0% on the
day, and at a premium of some $0.13 a bushel to corn.
Ongoing harsh winter conditions continue to underpin
wheat prices, with futures for March delivery currently up 0.5% so far.
"Snow remains extensive across much of the Plains wheat belt,
especially in Kansas, Colorado and Nebraska, and this is helping protect whet
from very cold temperatures," MDA said.
Richard Feltes of RJ O'Brien expected wheat to carry its "added
risk premium until 2014 US crop breaks dormancy."
Dryness was also keeping coffee prices in a buoyant mood
this morning with Arabica futures
for March delivery up 0.9% in electronic trade.
The steadier start follows a sizeable correction
yesterday which saw Arabica beans for March tumbled 4.4% from the last
session's eight-month closing higher to 136.75 cents a pound.
Thursdays rout was triggered by general profit taking as
well as comments from Colombia's Fedecafe growers' organisation, suggesting the
country could raise output a further 400,000 bags to 11.3m bags this year,
offsetting at least some of any losses in Brazil.
Despite Thursdays correction coffee, which at Thursday's
close was still up 24% so far in 2014 should for the moment remain supported
amid little, if any improvement in the
outlook for Brazilian weather.
The latest weather outlook from MDA shows that farmers in
Minas Gerais, the top coffee-growing state, can expect little or no rainfall
until at least mid-month.
Staying with the soft commodities, New York raw sugar stands
down over 1% early Friday following the decision by India's government to raise
the minimum cane price mills must pay growers by 5% to 220 rupees per 100
kilogrammes from October.
March futures finished down 1.6% in New York Thursday to
15.85 cents a pound, retreating back below its 50-day moving average after only
one close above the line.
Chartists at Phillips Futures suggest the "downtrend could still be intact" and futures
would need to "break above the
resistance level of 16.58 before we agree that there is a change in trend".
then test the support level of 14.63," given the divergence in momentum