Which market influence to take note of?
Agricultural commodity investors on Friday face an overload
of stimuluses already marked on the calendar, before getting down to any unscheduled
The calendar holds three. It is the last trading day of the
month, a time when funds are often viewed as withdrawing a little money, ahead
of early-month cash injections, as part of a tidying up exercise, rebalancing positions
and raising cash to pay clients.
As a further reason for caution, a long weekend lies ahead
in the US, which celebrates Labor Day on Monday, meaning three days without
trading, and potentially low volumes today.
And it is first notice day for Chicago's September contracts,
which kicks off the expiry process, and brings an idea of demand for physical
delivery or purchases against contracts.
In soybeans at least, "first notice day deliveries are expected
to be very light Friday due to the tight supply," Ker Chung Yang at Phillip
Then there is the meeting of central bankers at Jackson Hole
to worry about, a session which will be studied for any hint of willingness to
ease monetary policy and stimulate economic growth.
German retail sales data on Friday only underlined the
difficulties alive in the world economy, showing a decline for the European
Union's largest economy of 0.9%, compared with expectations of a 0.2% rise.
And this before getting down to the usual trickle of results
from the US harvest, and the Russian agriculture ministry meeting later over
which there is some expectation of taxes on shipments, despite protests from the likes of Ros Agro chief executive Maxim Basov.
'Export should dry up
Paris-based consultancy Agritel, which has an office in
Kiev, Ukraine, said that "Russian traders mostly expect a restriction of grain
exports from October.
"Many of them believe that no decision will be announced at
the end of today's meeting. But recent history has shown that decisions in
Moscow are very difficult to predict."
And after all, a downgrade on Thursday of 1m tonnes to 38m
tonnes by SovEcon to its estimate for Russia's wheat harvest means that "Russian
exports should therefore dry up very quickly", Agritel added.
In the US, Brian Henry at broker Benson Quinn Commodities
said: "I don't expect an all-out ban on exports nor do I expect a decision to have
any influence on the majority of the sales that are already on the books.
"However, I wouldn't be surprised to see some type of tariff
structure implemented. And per earlier reports out of Ukraine, they would
likely follow suit in a timely fashion."
Further underpinning prices was the concern over dry weather
in Australia, the southern hemisphere's top wheat exporter.
"The 'what if' scenario's regarding how low the Russian
wheat production will decline, along with reports earlier this week suggesting
that Australia could lose upwards of 6.0m tonnes of production due to the
dryness in their western growing areas, has be increasing the anxiety level for
the world's flour producers," Benson Quinn Commodities said.
Such thoughts helped wheat
hold its ground in early deals, adding 0.3% to $9.06 a bushel for Chicago's
December contract as of 09:15 UK time (03:15 Chicago time).
'Wearing on the longs'
Which was actually a little better than fellow grain corn managed, despite some initial concerns
over in Brazil, as sowing of the main crop commences, and continued reports of
Richard Feltes at RJ O'Brien said: "That initial wave of
early corn harvest yield reports has trade predisposed to a corn yield closer
to 120 bushels per acre than 125 bushels per acre" when the US Department of
Agriculture on September 10 releases its next Wasde crop report.
Hurricane Isaac is hardly expected to have helped matters, bringing
wind and rains which may have flattened crops in some areas, and caused some
ears to fall, while causing crop-stressing high temperatures further west and
Still, "confirmation of a lower ethanol grind, disappointing
export sales, reports of more wheat in the feed ration and lacklustre CIF corn
basis are collectively wearing on the longs", Mr Feltes added.
Chicago corn for December stood 0.25 cents lower at $8.08 ¼ a
bushel, and some 2 cents below the 20-day moving beneath which it closed again
'Brisk pace of demand'
Soybeans showed more definite direction, downwards, as
investors faced with the plethora of influences listed above, opted for
caution, despite continued concerns over the pace of demand.
US export sales data on Thursday showed a solid figure of 721,400
tonnes for soybeans, at the upper end of market expectations.
"Given only a smattering of soy yield reports thus far, and a
pick-up in August Midwest rains, we think the trade is leaning toward a higher
soy yield than the USDA's August forecast," Mr Feltes said.
Nonetheless, "the market is concerned less about a possible
modest gain in the 2012 US soy crop than by the ongoing brisk pace of US
Still, soybeans fell on profit-taking, by 0.4% to $17.55 ¾ a
bushel for November delivery.
In New York, cotton,
which as an industrial commodity, is especially sensitive to the macroeconomic
mood, dropped too, down 0.4% at 76.66 cents a pound for the December contract.
US weekly export sales data released on Thursday, at 90,000
running bales, were OK, in line with those the previous week.
New York raw sugar
for October added 0.8% to 19.91 cents a pound, as investors who have profited
from the sweetener's poor performance of late, down 13% in August, took month-end
gains, encouraged by weak expectations for output in the Indian state of
In Tokyo, rubber for
February added 0.3% to 218.50 yen a kilogramme, continuing to benefit from details released
late on Wednesday by Thailand, Indonesia and Malaysia, the three main
exporters, of plans to curb shipments by 300,000 tonnes over the