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Morning markets: grain, soybean futures stage tepid recovery

Grains and oilseeds started ahead on Thursday, but without too much conviction.

And, given the experience of the last couple of sessions, it is easy to understand why.

On Monday, Chicago crops opened weak, but closed in positive territory, at least keeping in with a history of gains on both the days before and after Christmas.

On Wednesday, when trading reopened after the holiday, a firm start gave way to a dismal finish, showing no deference at all to the so-called "Santa seasonal" trend.

Export positives

So which way for investors to head this time?

Many news on the fundamental front has actually been positive, with, for instance, the US Department of Agriculture on Wednesday revealing the sale of 115,000 tonnes of soybeans to China, and a further 108,000 tonnes to "unknown".

Mike Mawdsley at broker Market 1 said: "This was just the news we need to hear after the recent cancellations from China the past couple weeks," totalling nearly 1.0m tonnes (if some by "unknown" are included).

Furthermore weekly data on exports, as measured by cargo inspections, were solid too, at 13.5m bushels for corn, at the top end of market expectations, and 15.1m bushels for wheat, mid-range.

For soybeans, inspections reached 44.5m bushels, above market estimates.

'Insufficient snow cover'

Then, supportive for wheat, are concerns over Russian winter grains crops, which have braved a cold temperatures with a somewhat threadbare snow blanket in many areas.

"Temperature remains very cold in Russia," consultancy Agritel said.

Snow cover is generally "heterogeneous" and "still insufficient" in the South, where the chill "worries farmers".

However, such fears are being countered by improved thoughts on the drought-hit US crop, after moisture in parts of the Plains that needed it.

"The area that received the most moisture was in southern Oklahoma and northern Texas," Darrell Holaday at Country Futures said.

'Dry spots'

Meanwhile, ideas on South American weather, increasingly taking the spotlight, remain, generally, favourable.

 "There are no weather issues in South America and that has kept a lot of speculative interest on the sidelines," Mr Holaday said.

But US Commodities flagged some weak points, saying that "dry spots in far northern Brazil continue, affecting about 20% of the corn/soybean areas".

Flooding is still a problem in parts of Argentina too.

Prices rise

Meanwhile, although external markets remain somewhat clouded by the impasse on US budget negotiations, at least the dollar is weaker, down 0.2%, so making dollar-denominated assets including many commodities more affordable as exports.

But with volumes still low, threatening the potential for severe movement, as in the last session, investors were cautious about pushing crops too far higher.

Chicago wheat rebounded, but only by a small distance compared with its 2%+ losses of the last session which took it to a fresh five-month low.

The March contract gained 0.3% to $7.77 a bushel as of 09:30 UK time (03:30 Chicago time).

Corn for March, which set a five-month closing low in the last session, recovered 0.3% to $6.95 a bushel, while March soybeans gained 0.6% to $14.27 a bushel.

Mixed softs

Among soft commodities, New York raw sugar for March inched 0.4% higher to 19.12 cents a pound, given some support by the afore-mentioned dry weather in north eastern Brazil, the country's other sugar-growing region, apart from the main Centre South district.

But cotton for March eased 0.3% to 76.85 cents a pound, falling back on profit-taking after hitting a three-month high in the last session.

Cotton prices have been buoyed by firm US export sales, including to China, where huge stocks had appeared a bar to purchases.

Back among oilseeds, in Kuala Lumpur, palm oil extended its recovery on hopes for Malaysian exports next month, when export duties are being cut to zero.

March palm oil gained 1.2% to 2,459 ringgit a tonne, putting some distance between itself and the three-year low of 2,217 ringgit a tonne set two weeks ago.

Evening markets: grain, soybean prices find festive firmness
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