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",
"Temperatures should cool a bit then as well," the US-based weather
"That will ease crop stress a bit.
"However, dryness will build again in southern areas."
China rejects DDGs
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
But it gave a new leg to the story of Chinese rejections, on
grounds of containing a genetically modified corn variety unapproved in
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
"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
"Some believe that this will result in more DDGs fed in the
US resulting in a reduction of domestic soybean
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.
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 ½ a bushel, if
remaining below the 10-day and 20-day moving average lines lost in the last
And March corn added 0.3% to $4.27 ½ a bushel.
'Time for a year
That returned wheat
to bottom of the pile among Chicago's big three, gaining just 0.1% to $6.06 ½ 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 ¾ a bushel.
But did their bounce mean that more resilient can be
"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.
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.
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.