Bears lost some of their grip on agricultural commodities.
Much of the improved sentiment was down to a more risk-on
feel in financial markets sparked by ideas that the US may, after all, avoid
falling off its fiscal cliff.
Hope is waxing of US politicians reaching resolution on
budget cuts and tax rises less threatening to the welfare of the world's
biggest economy than the $600bn package which would come into effect by default
John Boehner, the Republican speaker of the House of
Representatives, termed as "very constructive" talks with, Democrat, President
Barack Obama on Friday.
Sean Callow, senior currency strategist at Westpac Bank in
Sydney said: "The good news is the tone of Friday's White House meeting.
Mr Callow added that "the prospect of no agreement until at
least mid-December fits our view that the two sides are starting negotiations
from rather distant points".
firm in Europe, adding 0.9% in London, after closing 1.3% higher in Tokyo,
while the safe haven of the dollar
eased a touch.
And Chicago agricultural commodities managed too to shake
off the selling pressure which has defined them for much of the past month or
In fact, the extent of the selling pressure appears to have
created some ingredients for a bounce, of some kind.
for instance, have a relative strength index, a key technical index of
momentum, close to 20, indicating a market that is extremely oversold, with any
figure below 30 deemed oversold to some degree.
And data on speculators' positioning raised questions over
whether the sell down by funds of their huge net long positioning in soybeans -
liquidation which has dragged the oilseed to near-five-month lows down 80% from
September highs - might be close to
running its course.
Regulatory data showed managed money holding a net long in
soybeans of some 125,000 contracts, down more than 38,000 in a week, and the
lowest since February.
The net long position has now halved in the last four
"Selling over the past several days may finally be bringing these
long positions to more manageable levels," Kim Rugel at Benson Quinn
At Market 1, Mike Mawdsley added: "It's been an ugly few
weeks in beans.
"Soybeans have certainly been hit the hardest lately, and
perhaps some short covering may happen."
Rain in Argentina
Weather in South America offered some scope for worry, with
further rains at the weekend for Argentina, where fields are already saturated
so proving difficult to plant, besides some parts of Brazil, such as Minas
Gerais, where it is more welcome.
(At least, for soybean growers planting crop and coffee producers enjoying a strong
flowering season, if less so for sugar
mills attempting to cut cane.)
And Argentina is set for more rain.
"The next three days looks fairly dry, but a strong cold
front comes in November 23-24 and develops significant showers and
thunderstorms over much of central eastern and north east Argentina, with
60-70% coverage of 0.5-2.0 inches (12 to 50mm)," weather service WxRisk.com
China auctions stop
Furthermore, ideas of China undermining the market - after
the cancellation of 600,000 tonnes of US purchases which sent futures tumbling
in the last session - took something of a back seat when it announced it was to
halt weekly sales from state inventories.
The move is aimed at ensuring that, with a new government
stockpiling programme starting, and at more generous prices, traders do not simply
sell soybeans back to the government.
Soybeans for May added 0.2% to 4,747 yuan a tonne on the
Dalian exchange, and, for January delivery stood 0.9% higher at $13.95 ½ a
bushel in Chicago at 09:50 UK time (03:50 Chicago time).
For corn, the
same idea of heavy sell-down of speculative positions having lowered the pressure
for more appeared to hold some sway.
Managed money cut its net long exposure by 32,000 lots in a
week to less than 203,000, down from more than 340,000 contracts three months
ago or so.
Furthermore, the grain has received a lift from the US
Environmental Protection Agency's refusal to waive requirements for blending
corn-based ethanol into gasoline, despite protests from eight states that this
is driving up food costs.
The mandate has not caused "severe economic harm", and
waiving it "will have little, if any, impact", the EPA said.
Meanwhile, ideas of demand have been helped by growing
forecasts for European imports, which Strategie Grains has forecast EU at 11.5
tonnes, well above the US Department of Agriculture forecast at 6.5m tonnes.
Corn for December added 0.7% to $7.31 ¾ a bushel.
'Rejection of the low
That helped fellow grain wheat out of a precarious situation too, precarious in that that
the last session saw Chicago's December contract fall below the floor of a
four-month trading range, before recovering some ground to get back in touch.
"It's worth noting that the markets did attempt to rally
back to the initial down-side objectives in the last session, which could be
construed as a rejection of the low side of the range," Brian Henry at Benson Quinn
And there is some hope from the fundamental perspective too.
"US hard red winter wheat crop conditions continue to
deteriorate, raising serious questions about 2013 yield prospects," Luke
Mathews at Commonwealth Bank of Australia said.
'Export sales were
"Furthermore, importers have purchased significant tonnages of
wheat as prices declined and US weekly wheat export sales were encouraging," Mr
Indeed, despite the bearish performance by wheat futures
last week, "much of the wheat-specific news flow was supportive for price", he
However, there is one significant omission from the register
of importers buying, and that is Egypt, the top importer, which has for some
days been rumoured to be on the verge of fresh purchases, but not revealed any
That included a failure over the weekend to come up with a
Still, Chicago wheat for December added 0.4% to $8.41¼ a
Palm defies weak data
The better mood spread to palm oil too, for which the February contract added 1.1% to 2,455 ringgit
a tonne in Kuala Lumpur, despite Societe Generale de Surveillance confirming a decline
Malaysian exports so far this month.
The cargo surveyor put the drop at 1.2%, higher than the 0.1%
drop estimated by rival Intetek on Friday.
In New York, raw
sugar bounced 2.0% to 19.564 cents a pound for March delivery, helped by
ideas of cane harvesting delays, thanks to Brazilian rains.