PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 08:26 GMT, Friday, 27th Dec 2013, by
Morning markets: corn, soy recover from post-Xmas hangover

The outlook for Argentina is for better, but not perfect, weather for the row crops expected to be harvested not long into 2014.

Sure rains are "expected to build later this weekend and early next week" across northern Cordoba, northern Santa Fe and Entre Rios, where dry and hot conditions have been "increasing stress and moisture losses", MDA said.

"Temperatures should cool a bit then as well," the US-based weather service added.

"That will ease crop stress a bit.

"However, dryness will build again in southern areas."

China rejects DDGs too

There was enough risk, anyway, to help make readers reassess whether they had not overdone a little the gloom in the last session, when crops dropped on news that China had begun rejecting some US distillers' grains, as well as corn, over GM concerns.

Sure, it was only a small amount, 2,000 tonnes, of distillers' grains, or DDGs, a feed ingredient manufactured as a byproduct from ethanol plants.

But it gave a new leg to the story of Chinese rejections, on grounds of containing a genetically modified corn variety unapproved in Beijing.

Corn lost nearly 2% in the last session in Chicago, helping drag soybeans down more than 1%, and countering a typical seasonal rally in the row crops on the day after Christmas.

'Cast a pall over trade'

"Chinese DDG rejection news cast a pall over futures trade," in the last session, CHS Hedging said.

Another US broker said: "The rejection of DDGs due to the non-approved GMO variety corn was the main headline to shake up markets after the holiday."

"Some believe that this will result in more DDGs fed in the US resulting in a reduction of domestic soybean crush needs."

Indeed, the impact on the soybean market is not just one of a reminder that China is expected to cancel many orders of US imports too come the new year, assuming a decent South American harvest allows buyers to purchase more cheaply there, but that DDGs are a rival to soymeal in feed.

Both are protein sources. Ideas of substitution with DDGs sent soymeal for March down 1.8% in the last session.

Prices recover

But helped by remaining Argentina weather concerns, and a relatively resilient performance by the soy complex on China's Dalian exchange overnight, where May soymeal recovered early losses to close just 0.2% down at 3,365 yuan a tonne, and Chicago prices fared better in early deals on Friday.

March soymeal stood 0.4% higher at $426.50 a tonne as of 08:20 UK time (02:20 Chicago time).

March soybeans gained 0.4% to $13.10 a bushel, if remaining below the 10-day and 20-day moving average lines lost in the last session.

And March corn added 0.3% to $4.27 a bushel.

'Time for a year ending rally?'

That returned wheat to bottom of the pile among Chicago's big three, gaining just 0.1% to $6.06 a bushel for March.

Still, this was after a relatively firm closing performance in the last session, when the contract shed just 0.25 cents a bushel, raising ideas that wheat futures may have found a bottom after their dismal performance in December up to Christmas.

They had lost nearly 10% as of the low of the last session, of $6.00 a bushel.

But did their bounce mean that more resilient can be expected?

"We note wheat did seem for find support near $6.00 a bushel," one broker said.

CHS said: "Wheat futures are getting oversold, perhaps it's time for a year ending rally to unfold," noting that futures had lost some $1 a bushel in two months.

Data later

Will prices stay higher, given that trade is being undertaken in holiday-thinned volumes which can exaggerate the impact of any deals and make for large swings?

Much may depend on US weekly export data due later, expected to come in at 400,000-800,000 tonnes for soybeans.

For corn, sales are expected at 200,000-650,000 tonnes, and for wheat at 300,000-600,000 tonnes.

For soymeal, a figure of 75,000-125,000 tonnes is forecast, and for soyoil, of 5,000-15,000 tonnes.

Mixed softs

Among soft commodities, cocoa fared poorly in the last session too, shedding 1.3% to $2,873 a tonne in New York for March delivery, a decline attributed to year-end profit-taking, after a rally which has taken it to among its highest levels in two years.

London cocoa, closed on Thursday for a UK holiday, opened on Friday 0.2% down at 1,806 a tonne.

But raw sugar extended small gains of the last session, adding 0.3% to 16.34 cents a pound in New York for March, as the weight of hefty world supplies clashes with ideas of value at these levels.

Evening markets: corn, soy maintain record for festive gains
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