Tuesday may not be counting exactly as a "turnaround" one,
those phenomena of Chicago lore which reverse a strong price trend of the
But it certainly rated as a turgid one in early deals, as
investors balanced a number of stimuli, and ended up unsure of which way to
There were some negative stimuli around, such as the
continued worries over whether elevated prices are already doing enough to
especially, a succession of weak US export sales data, soft US ethanol production
statistics (and Poet's announcement of plant shutterings), and a
weaker-than-expected cattle population on feedlots have sparked ideas of demand
rationing happening at a clip.
But there are some concerns over wheat too, at least of the hard red winter variety, which Benson
Quinn Commodities described exports as "slow, offering some supply cushion into
the next marketing year".
"Global wheat buyers continue to tender, but the bulk of the
supply continues to be sourced from other origination points," the broker said.
Improving conditions in the Ukraine, where talk is of a
20-30% rebound in yields this year, a failure to confirm talk of Russian imports,
and ideas of strong Canadian spring wheat sowings also represent a little bit
of a negative.
Meanwhile, there is some caution in markets broadly ahead of
a string of data from the world's top two economies on Friday, including
indicators on China's manufacturing sector and a key US jobs report.
The US Federal Reserve starts a two-day policy meeting today
GFS vs EU
However, it was difficult for investors to get too bearish
too, without an improvement in the South American weather forecast, whose
deteriorated aspect has prevented the early harvest in Brazil offering much in
the way of pressure to prices, as might have been expected.
"South American weather is becoming of more importance as
GFS and EU weather models have come to more agreement on a drier outlook for
Argentina and southern Brazil into February 10," Benson Quinn said.
"The forecasts currently
more of a concern for the Argentine corn crop than for soybeans," given the crops' development cycles.
"But with GFS models going drier some analysts have started
to trim Argentine soybean production estimates."
The GFS model has previously offered a wetter, more
comforting pattern for farmers than the European one.
At Phillip Futures, analyst Joyce Liu said: "Weather in
Argentina and Brazil has to improve to meet their target forecasted output to
replenish tightening global stocks.
"Moisture is desperately needed in corn and soy fields in
the next few days."
And actually a bit of dryness too in central and northern
Brazil, where crops are more advanced, and wet weather is hampering early
harvest, and the supply of soybeans to ports and hungry import markets.
"All eyes are also watching out for potential infrastructure
bottlenecks in Brazil, which had accepted bumper orders for its supposedly
bumper crop," Ms Liu said.
Boat line-ups in Brazil's ports are reportedly reaching the
equivalent of 45 days.
Meanwhile, one other major weather concern, the drought in
the US Plains, revisited markets after Kansas, the top wheat-growing state,
revealed a further deterioration in its crop this month, blaming "limited
The proportion rated "good" or "excellent" fell four points
over January to 20%, compared with 49% a year before.
The proportion rated "poor" or "very poor" rose eight points
to 39% - up from 12% at the end of January 2012.
And technically, markets offered a better aspect too, with
Mike Mawdsley at Market noting how corn in the last session "fought back and
slowed over the downtrend" and soybeans clung on to end above their 20-day
"It was a good day for grains and soybeans, to start the new
week," he said.
Chicago corn for March added 0.1% to $7.30 ½ a bushel as of
09:40 UK time (03:40 Chicago time) to set course for another showdown with its 75-day
moving average, at a little under $7.31 a bushel.
The contract has oft challenged its 75-day line this month,
and sometimes managed to temporarily break above it, but has not actually
managed to close above it since November.
The 50-day moving average, at a little under $7.24 a bushel,
has been comfortably secured for now.
Wheat for March stood up 0.25 cents at $7.79 ½ a bushel,
pretty much at the same level as its 10-day moving line, leaving soybeans the
weakest of Chicago's big three.
The March soybean contract stood 0.1% lower at $14.46 a
Nonetheless, Phillip Futures' Ms Liu, flagging China's "positive
soybean crush margins and rising demand for soybean meal", and record pace of
processing, forecast "continued strength in front-month soybeans up to $14.50-a-bushel
levels by first week of February".
In New York, raw sugar
echoed grains in reporting a small gain, up 0.1% at 18.74 cents a pound for
March, continuing a recovery fuelled by concerns that a huge speculative net
short position may mean that selling pressure from that category has already
run its course for now.
Heavy rains in Australia are, while causing widespread
flooding, seen as bringing some benefits as well as disaster.
"Some irreversible damage is expected, particularly around
Bundaberg which is experiencing its worst flooding on record," Luke Mathews at
Commonwealth Bank of Australia said.
"However, some regions will benefit from the increased
But New York cotton
maintained a firm place in investors' good books, adding 1.6% to 82.35 cents a pound
for March, helped most lately by a downgrade by Cotlook to its hopes for the
world cotton supply surplus, citing increased demand.
In Australia, for cotton too rain is proving a mixed
"Most New South Wales cotton crops are expected to benefit
from the additional moisture", Mr Mathews said,
But in Queensland, "the worst inland flooding is throughout
the Darling Downs region where production losses are likely".