Surely corn can't
manage to evade bears' clutches again.
The grain surprised many investors by hatching a last-minute
escape from negative territory in the last session, to record its eighth successive
This despite downbeat US weekly ethanol production data, at
784,000 barrels the lowest since records began in 2010.
And corn kept its head above water in early deals on
Thursday too, even as its peers in Chicago succumbed to profit-taking.
'Not ready for corrective
But then, after being trapped in a vicious circle late last
year of price falls which worsened the grain's technical picture which inspired
only further retreats in values, corn futures have got into more of a virtuous
one at present.
The March contract's close over its 50-day moving average on
Tuesday, for the first time in more than a month, has been widely clutched as a
positive chart sign.
Now the 100-day moving average, at a little under $7.44 a
bushel is also being mentioned as a target, above which the contract has not
finished since thje start of November.
"Charts look good for the moment, and have an upward bias to
them," said Mike Mawdsley at Market 1.
Benson Quinn Commodities said that the corn's escape from
jail in the last session suggests that "the market may not be ready for a
corrective move lower just yet".
"However," the broker added, "another weak export sales
figure could be the catalyst" for a move lower.
US on Thursday crops face the weekly trial of US export
sales data, for which investors have reasonable expectations in corn, of
150,000-475,000 tonnes, which would represent a marked improvement on the
12,600 tonnes last time.
However, analysts have in 2012-13 shown a remarkable knack
for overestimating considerably US corn exports, which are being undermined by cheaper
(For how long? The onset of the soybean harvest, and the
start next month of Brazil's long-awaited soy exports in earnest, will test the
ability of the country's creaking infrastructure to deal with corn as well.)
'Needs for rains'
The other main expected influence on prices of corn, and
indeed of soybeans too, is the South American weather outlook.
"In Argentina, the lack of rain could become an issue as the
next 10 days' forecast is dry while corn and soybean are developing", Agritel
noted, becoming the latest in a long
list of commentators to question the US Department of Agriculture's upgrade
last week of its Argentine corn harvest estimate to 28m tonnes.
That would be achieved "only with ideal conditions", Agritel
Benson Quinn Commodities said that, in much of Brazil too, "sub-soil
moistures are ample, especially for Argentina after spring flooding.
"But top soil moistures will become depleted as temperatures
warm over the next seven-to-10 days.
"The need for rains into the end of the month will be of
importance as Argentine soybeans move into key flowering and pod-setting stages."
'Supported by weather
At Singapore-based Phillip Futures, Joyce Liu said that "news
of weather conditions, together with USDA export figures, will be the main
drivers of grains market today".
But assuming reasonable export data, "we expect markets to
be in general supported by weather concerns," albeit with the risk of some
That was not so evident in corn as of 10:00 UK time (04:00
Chicago time), when Chicago's March lot was 0.1% higher at $7.32 ¼ a bushel.
However, soybeans, which emerged less bullishly than corn
and wheat from a rash of USDA crop data last Friday, did succumb, losing 0.5% to
$14.29 ¼ a bushel for March delivery.
"Trade is looking for decent US export sales on Thursday which
will be key to Thursday follow-through as markets start to edge towards some
significant resistance levels," Benson Quinn said.
'Question the validity'
Wheat showed small gains in Kansas, up 0.1% at $8.43 a
bushel for March delivery, with Kansas trading the hard red winter wheat most
at risk from lingering drought in the US Plains.
Indeed, satellite-based analysis group Lanworth on Wednesday
cut by some 500,000 tonnes, to 53.8m tonnes, its forecast for US wheat output
"I question the validity of their research, but you don't
have to look very hard to find people willing to reduce the size of the wheat
crop," Benson Quinn's Brian Henry said .
But Chicago soft red winter wheat, grown largely in the Midwest,
where some areas have replenished moisture levels, eased 0.25 cents to $7.84 ¾ a
bushel, but remained comfortably above its 20-day moving average, at a little
under $7.71 a bushel, which has been capturing technical attention.
Among New York soft commodities, raw sugar for March was
unchanged at 18.45 cents a pound in early deals.
But for how long? "Values have dropped for three consecutive
sessions," as of Wednesday, "with cumulative losses of nearly 4%, and the nine
month downtrend remains firmly in place," Luke Mathews at Commonwealth Bank of
Cotton for March added
0.1% to 77.42 cents a pound, adding to gains of 1.5% in the last session, and
indeed extending an upward run, helped by expectations of a smaller US crop
US farmers intend to cut cotton sowings by 21% to 9.73m
acres this year, the second-smallest area since 1983, because of higher input
costs and lower prices of the fibre, a survey by Cotton Grower magazine showed.
However, Australia & New Zealand Bank and Commerzbank on
Wednesday cautioned over getting too bullish on cotton.