Grains and oilseeds began Friday a little more
resolutely than where the last session left off, but not by much.
That said, there is no guarantee this will last of course with the
market in a somewhat fickle mood, as befits the time of year, as one US broker
"For now we recommend caution while hedging/trading in
December as there are many undertones that can affect prices," the broker said.
"Many traders go on vacation for the holidays and with that
volume drops off. Low volume can sometimes lead to larger price swings."
Not that large price swings were the issue in early deals, but
what movement there was largely downward.
Canola, for instance, edged Can$0.10 lower to Can$448.00 a
tonne in Winnipeg for January delivery, after recording a three-year closing
low to the last session.
The oilseeds has been pressed by the upgrade last week to
the Canadian harvest to a record 18.0m tonnes, leaving buyers, while described
as "keen", without much need to bid up to secure supplies.
"Although keen demand by importers could push Canadian
exports to 8.3m tonnes, most of the [canola] production gains are likely to
raise carryout stocks," US Department of Agriculture staff said in a report
"Season-ending canola stocks are seen climbing to 2.35m tonnes
- a nearly four-fold increase from last year's inventory."
Meanwhile, the Chinese rejection of US corn imports on grounds of containing an unapproved genetically
modified variety, besides concerns over cancellations of purchases of US soybeans to switch to cheaper South
America supplies, has rattled the canola market a bit too.
China imported 2.9m tonnes of Canadian canola seed worth
$1.8bn last year, but has a history of barring purchases on this route over
concerns of blackleg, a fungal disease.
"The persistent cancellation of US corn imports by the
Chinese has spooked global oilseed markets," Luke Mathews at Commonwealth Bank of
Australia said, although focusing in the main on the impact on the soybean
"There is some concern that Chinese buyers may use
quarantine measures to cancel some US soybean shipments given the exceptionally
fast pace of purchases in recent months and the impending record Brazilian crop."
'The timing is
Such fears continued to hang over the soybean market on
Friday, despite the lack of confirmation of such a move.
"At this stage this is all simply speculation," Mr Mathews
Indeed, with Thursday's US weekly export sales data far stronger
than expected, yet soybeans still closing lower in the last session, some
investors believe that there are other forces at work.
"The truth is we don't know what prompted the market to
sell-off on Thursday, and the timing is suspect," one broker said.
After all, a monthly US soybean crush report due on Monday "is
supposed to be very strong, and we just had an export sales report almost
double of what was expected for old crop soybeans".
The broker added: "One theory is that the funds use strong
fundamental news days to liquidate large positions," with hedge funds holding a
substantial net long position in Chicago soybean futures and options, on which many
will be showing a profit.
A clue may come in the day's open interest report, showing
the extent of contracts still open, and which would show a sharp decline if
there has been a liquidation drive.
But as of 09:35 UK time (03:35 Chicago time) soybeans were 0.4%
lower at $13.19 a bushel for January delivery.
for January was weak, down 0.8% at 39.69 cents a pound, after a 1.8% tumble to
7,996 yuan a tonne in the May contract on China's Dalian exchange, Chicago soymeal
was little more resolute, fall a more modest 0.2% to $429.30 a short ton.
'Something had to
This after a poor performance in the last session, when
soymeal was undermined by news of Argentina winning a South Korean tender for the
feed ingredient with prices $40-45 a tonne below US offers.
"The news highlighted the deep discount, which is also
relevant in Brazilian soybean offers," Benson Quinn Commodities said.
"All is not lost as European Union and Middle East
destinations continue to shop the US for soymeal, which lends credence to ideas
that the trade was simply too long coming into Thursday and something had to
give," the broker added
For corn and wheat, in which hedge funds have large
net short positions, liquidation would imply a rise in prices.
But sellers remained in charge in these pits too, with corn
continuing to be undermined by concerns of the rejection of US cargoes by
China, and by a bill proposed by some US senators to ditch the ethanol mandate.
proposal has very little chance of success, it nevertheless highlights the tide
change which is occurring against the ethanol sector," Mr Mathews said.
Corn for March stood 0.4% lower at $4.32 ¾ a bushel, falling
below its 10-day moving average which had provided some support of late.
Wheat for March shed 0.3% to $6.31 ¾ a bushel, but at least
avoided setting a contract low, so far.
The contract is being pressed by "huge crops in Canada and
Australia, which added to global supplies and made US wheat lose its
competitiveness in the global export market, especially at its expensive prices",
Vanessa Tan at Phillip Futures said.
Furthermore, while US conditions remain unduly cold, "winter
wheat crops are unlikely to be adversely affected as the snow blanketed the
crops, protecting them from the cold temperatures.
The result was a "bearish" outlook for the grain, she said,
with Kansas City hard red winter wheat doing no better, falling 0.3% to $6.76 ½
a bushel, and Minneapolis spring relatively resolute, down only 0.25 cents at $6.63
¾ a bushel, only after strong underperformance.
Among soft commodities, raw
sugar began on a stronger note, adding 0.4% to 16.36 cents a pound in New
York for March delivery, helped by a Syrian tender for 150,000 tonnes, which
raised hopes that prices may have fallen far enough to whet end-users'
In the previous 23 sessions, going back to November 11, the sweetener has risen only thrice, losing nearly 10% of this period.
And cotton for
March edged higher too, by 0.2% to 83.19 cents a pound, after data overnight
showed a further drop in stocks certified for delivery against New York
futures, to 59,346 bales, from 61,519 bales the previous session.