PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:37 GMT, Tuesday, 24th Dec 2013, by Agrimoney.com
Morning markets: soy futures keep with Christmas tradition

Chicago has some of its own Christmas traditions.

These include a few followed on grain and oilseed markets.

According to CHS Hedging, March corn futures have "closed higher both the day before and day after Christmas in nine of the last 10 years.

"The average gain the day before is 2.86 cents a bushel and the day after the average increase of 6.1 cents."

January soybean futures, meanwhile, "have closed higher the day before Christmas nine times with an average gain of 9 cents a bushel".

They have gained the day after Christmas "eight times with an average rally of 27 cents".

'Unwinding of spreads'

Soybeans made a decent go at maintaining the seasonal patterns.

The January contract was up 2.75 cents at $13.31 a bushel at 10:35 UK time (04:35 Chicago time).

The better-traded March contract was up 1.5 cents at $13.21 a bushel.

Corn for March was 0.25 cents lower at $4.34 a bushel.

'Prevent yield declines'

In part, trend of late of profit-taking on spreads was dictating against positive movement in both crops.

"Floor sources report unwinding of soybean/corn spreads ahead of the holiday," Richard Feltes at RJ O'Brien said, the spreads in question being long soybean-short corn ones.

However, support from the Argentine hot spell that has been worrying investors was also a little crumbly.

"Hot and dry weather in northern and central Argentina this week will accelerate drying of soils and increase stress on corn and soybeans," weather service MDA said.

"However, rains are expected to increase in these areas during the six-to-10 day period, which should improve conditions for crops and prevent any notable yield declines."

'Extreme heat'

It has to be said that not all forecasts are so benign, with WxRisk.com cautioning that in the six-to-10 day time horizon "it should be noted however that Buenos Aires as well as La Pampa and the southern portions of Cordoba and Santa Fe do not see any rains.

"The models continue to show extreme heat with temperatures running 6 to 8 degrees Fahrenheit above normal over all of Argentina and south east Brazil."

And heading into the first week of 2014, while Argentina will get some rains, they look like being of one inch or less.

"Saying 1 inch a rain over a five-day interval is certainly a lot better than saying no rain all, but it's not really what could be considered as significant rainfall," WxRisk.com said.

In fact the GFS model "actually has all of central and eastern Argentina completely dry, with only a few areas of light rain over northern Argentina".

'Import forecast too high'

Still, with weather forecasts prone to change, and Argentine crops having got off to a good start, investors were not willing to take out any hefty positions on this ahead of a holiday period when trading liquidity is low, if the market is open at all.

Furthermore, there are some other risks to taking out positions, with the ongoing concerns over Chinese rejection of some US corn cargoes, on grounds of containing a genetically modified variety unapproved in Beijing.

"Evidence is mounting that the US Department of Agriculture's 7m-tonne Chinese corn import forecast [for 2013-14] is too high," Mr Feltes said.

That said, South Korea has taken a further 120,000 tonnes of US corn, in connection with the Chinese rejections, with half shifted from Black Sea origin.

'Seasonal to buy soyoil'

Another seasonal price factor which was struggling was of a rise in soyoil prices.

"For the daring, the seasonal is to buy soyoil - good luck," Mike Mawdsley at Market 1 said, but Chicago's March contract was up a modest 0.1% at 39.61 cents a pound.

And that relied in part on strength in rival vegetable oil palm oil, which added 0.2% to 2,622 ringgit a tonne in Kuala Lumpur, boosted by Malaysian ringgit weakness, making ringgit-denominated shipments more competitive, and by concerns over a dockworkers' strike in Indonesia's biggest port, Tanjung Priok.

"The Jakarta-based port accounts for about 50% of oil, containers and dry bulk goods trade in Indonesia," Chee Tat at Phillip Futures said.

"Although port officials and the Indonesian Palm Oil Association had reiterated that the strike did not affect daily operations, [there are] concerns that possible disruptions could shift some demand from Indonesia palm oil to Malaysia palm oil, hence supporting the benchmark price for the commodity."

Wheat falls again

Back in Chicago, wheat maintained its December downswing, little helped by a US weekly export number on Monday which, at 19.46m bushels, was a little below some forecasts.

Indeed, neither technical nor fundamental factors are offering the grain much support.

In the US, "many key hard red winter wheat growing regions received snow fall," protection against frost, "which adds to the fact that few very wheat growing areas in the northern hemisphere have faced much in the way of obstacles," Brian Henry at Benson Quinn Commodities said.

"The bids on Indian wheat export tenders ranged from $283-288 a tonne, which is well above their floor price, but offers few signs that US wheat has value near these levels.

"The supportive factor in the wheat markets is the oversold nature of all three markets, which isn't much for the bottom picker to buy into given the fact that previous efforts have not worked well."

Chicago wheat for March was 0.1% lower at $6.08 a bushel at least, for bulls, failing yet, for a second session, to set a fresh contract low.

'Continued global deficit'

Among soft commodities, cocoa for March added 0.6% to 1,802 a tonne in London, if falling just short so far of matching the last session's two-year peak of 1,807 a tonne.

"Fundamentally, cocoa is mainly supported by the expected continued global deficit of cocoa," Phillip Futures said.

"With elevated demand for cocoa, supply from West Africa may not be able to meet demand.

"This further exacerbates the current situation of supply deficit and strong demand, highlighting the bullishness of the cocoa market."

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