"Turnaround Tuesday", the Chicago traders' guide which says crop
futures reverse on the second session of the week a strong trend on the first,
would dictate a negative feeling to trading.
And soybeans certainly took the theme to heart, losing some
of their strong gains of the last session, when renewed fears of South American
weather added to a pull from grains to lift prices.
Chicago's March lot, now in the spot position, eased 0.5% to
$14.10 ½ a bushel as of 09:35 UK time (03:35 Chicago time), amid some doubts
that the oilseed has the oomph to kick start for real a fresh rally.
"We are sceptical that soybeans' mid-December high of $14.30
a bushel will be penetrated unless 2013 South American soybean production
estimates trend lower," Richard Feltes at RJ O'Brien said.
And such downgrades do not look on the cards for now, with
the drier trend in Argentine and Brazilian weather raising questions rather
than alarm right now.
While Michael Cordonnier, the prominent crop scout, did cut
his forecast for Argentina's soybean crop by 1m tonnes, he raised his estimate
for the Brazilian harvest in line.
Mr Feltes said: "China's US soy purchase program is winding
down, a 30m-tonne gain in 2013 South American soy production still appears
likely and a rally for March soybeans above $14.95 a bushel will be needed to
confirm a technical bottom."
Chicago corn futures for March, meanwhile, "need only
retrace to the $7.50-a-bushel area to reignite technical buying".
That did not look such a stretch in early deals, with corn
for March up 0.1% at $7.24 ¾ a bushel – managing, indeed, to notch up something
of a technical victory in climbing, just, above its 50-day moving average.
The contract has not closed above this line for more than a
But then the grain had the benefit of emerging particularly
bullishly from Friday's US Department of Agriculture's January Wasde crop support
and demand report, which cut the estimate for domestic stocks at the close of
2012-13 more than the market had expected, to a 17-year low.
This downgrade rested on a higher idea of US corn feeding to
livestock, after stocks as of December 1 were revealed far lower than thought.
And "with only 10 weeks until the next quarterly stocks
report, we're not sure how much rationing the US livestock industry will
achieve - especially if feeders have three-to-five weeks of their corn needs
already covered", Mr Feltes said.
At Benson Quinn Commodities, Brian Henry noted growing expectations
of "the return of $8-a-bushel corn in the coming months", if being a little sceptical
of such an outcome.
"Without improved ethanol and export demand, or large
inflows of managed money, that looks to be a reach at this time unless we see
significant issues emerge threatening South America prospects," he said.
And, indeed, there are some sceptical voices around that
corn will extend a winning streak, in terms of successive session rises, which is
already its longest since June, in the early days of the rally on US drought
"The hotter and drier weather expected in Argentina may keep
prices supported in the next few days," Joyce Liu at Phillip Futures said.
"Today however, we believe corn prices may end flat as
buoyant market sentiments of strong fundamentals may be partially offset by
overbought signals, as presented by the relative strength index."
'More downside price
risk than upside'
At Texas A&M University, Mark Welch flagged the prospect
for large US corn sowings this year, given the ratio of the grain's price to
those of soybeans, the leading rival crop on many farms.
"A current soybean to corn price ratio of 2.2 does not
suggest that corn prices need to rally relative to beans to capture acres," he
"In recent years it has taken a soybean to corn ratio of 2.5
to equate soybean returns to that of corn.
"With expanded acreage and favourable growing conditions in
South America and the likelihood of strong plantings in the US next spring, I
see more downside price risk than upside potential at this time."
On wheat, Dr Welch flagged the same dynamic, but did temper
his outlook with the danger of "production risk", given the poor state of the
US winter wheat crop heading into dormancy.
Mr Feltes said: "Unlike row crops, wheat faces a more
immediate threat from lingering 2012 drought that threatens 2013 US hard red
winter wheat yields."
And this after US winter wheat sowings were revealed on
Friday to have been below estimates.
Winterkill is emerging increasingly as a risk for Russian
wheat too, with Agritel estimating that some 20-30% of crops in the oblasts of
Saratov, Orenburg, Samara and the south parts of Rostov should have suffered "damage"
during last week's cold spell.
Official forecasts for damage to 8-9% of the overall Russian
crop "underestimate" the problem, Agritel said, pencilling in a figure of
Chicago wheat for March extended its recovery, adding 0.7%
to $7.72 ¼ a bushel.
However, soft commodities maintained a more negative stance
in early deals, when New York raw sugar
for March dropped 0.6% to 18.79 cents a pound.
Luke Mathews at Commonwealth Bank of Australia noted
pressure from "technical selling, favourable Brazilian field conditions and
widespread calls for another supply surplus in 2013".
Back among oilseeds Kuala Lumpur palm oil did better, rising 1.1% to 2,397 ringgit a tonne, in part
playing catch-up with the Chicago soy complex's rise on Monday, and given a
further boost by a decision by Malaysia to keep palm export duties at zero for