Which way for grain and oilseed prices now?
Did the setbacks of the last session indicate an end to the
rising trend sparked by last week's US Department of Agriculture cuts to estimates
for domestic corn and wheat supplies at the close of 2012-13?
Or was it a mere pause within a rising trend?
Brian Henry at Benson Quinn Commodities was not so upbeat
over prospects, flagging forecasts for some moisture in Argentina heading
towards the end of January, easing concerns over a country where dryness has
succeeded flooding as a concern.
He also highlighted March corn's close in the last session
just below its 50-day moving average, which it surrendered after only two days
closing above it, and a move deemed "not supportive".
"A sideways trading range developing between $7.00 and $7.50
a bushel seems appropriate for the near term," he said.
And that meant wheat was less likely to make much headway either.
"While the wheat market continues to show some strength late
in the last session, the supportive factors of the USDA report are getting
stale," Mr Henry said.
"The funds are involved, but to a lesser degree as they are
still reeling from the 'buy in July and sell in November' pattern in the row
"Outside of some legitimate supportive news in corn and/or
wheat, I favour the short side for the time being."
'Downside potential limited'
However, Richard Feltes at RJ O'Brien took a more upbeat view,
advising investors "against reading too much into today's low volume sell-off".
"We think end-users and value buyers will emerge on breaks.
Downside potential on old crop row crops is limited," although the soy complex
looks like being "less resilient in maintaining the old crop bull story".
After all, even if Thursday's strong US export sales data
for all three major crops were spurred by prices no longer available, other
demand signs are firm.
There is "no sign of rationing in the hog sector", while "chicken
producers continue to enjoy above average margins on heels of buoyant retail
broiler prices", Mr Feltes said.
"I suspect that ag marks will claw back more risk premium
into a three-day weekend," with US markets closed on Monday for Martin Luther
Investors still undecided were given a nudge in the bullish
direction from broader financial market sentiment, which was buoyed by data
showing China's economy growing by 7.9% in the last three months of 2012.
The figure beat expectations of 7.8% growth, and ended a run
of seven straight weaker quarters, (although it was insufficient to prevent China
recording a full-year expansion figure of 7.8%, the lowest in more than a
The data followed further evidence on Thursday of economic revival
in the US, where weekly U.S. unemployment hit five year-lows while housing
strongly in Asia overnight, gaining 1.4% in Shanghai, 1.0% in Hong Kong and
soaring 2.9% in Tokyo.
The gains in crops were not so huge. But, in adding 0.6% to
$7.28 ¾ a bushel as of 08:50 UK time (02:50 Chicago time), Chicago March corn at least crossed back over its 50-day line,
easing some of the technical concerns.
Data late on Thursday from the Buenos Aires grain exchange
showed farmers still not finished with corn seedings, with some 225,000 hectares
still to go, if a little ahead of last year's pace.
Meanwhile, soybeans for March added 0.4% to $14.36 ¼ a
bushel. Argentine farmers are 96.1% finished with seeding the oilseed 4.4
points ahead of last year.
Wheat lagged a little too, adding 0.3% to $7.83 ¼ a bushel
for March. While Argentina's government on Wednesday cut its estimate for the
crop to 10.1m tonnes, that was a surprise to few.