Are commodities, including agricultural ones, getting back
into investors' good books?
That was one idea floating around on grain markets on Friday
to explain a firm performance by the likes of corn and soybean futures
on what might have been expected to be a downbeat day, with harvest pressure
and talk of mildly better-than-expected US harvest yields still floating
"Money could be shifting to commodities looking for value,"
said Benson Quinn Commodities.
"Geopolitical tensions with North Korea," while undermining
Wall Street stock prices in late deals, "could also be shifting money to the
commodity markets," the broker said.
Investors often see, after all, changes in money flows as
behind opposite moves in share markets and commodity markets.
As for any other support for such a theory, well, some have
pointed to the recovery in freight markets as evidence of greater demand for
stuff including raw materials.
The Baltic Dry index on Friday topped 1,500 points for the
first time since March 2014, with stronger shipping rates highlighted in
results of an Egyptian wheat tender
earlier this week too.
Strong shipping markets mean that "economists are therefore
suggesting the world is about to show strong commodities growth going forward",
Sucden Financial said.
Still, there were other reasons proffered for the market
strength which saw soybean futures
for November close up 1.5% at $9.84 ¼ a bushel, including strong demand, with
the US Department of Agriculture announcing yet another export sale of US crop.
This time it was for 190,000 tonnes purchase by Mexico.
Richard Feltes at RJ O'Brien noted that "the sale announced
marks the fourth in five days, but today's is to Mexico, not China," the top
That said there is still talk of Chinese buyers being in the
market, he added.
Chart factors were viewed as helpful too.
Darrell Holaday at Country Futures said that the session was
marked by "generally a technical trade in the soybean complex, as the support
in the $9.60-a-bushel area held yesterday.
"That has spurred buying at the bottom of the sideways
Furthermore, Friday's price gain pushed the November
contract back above its 200-day moving average, above which it had not finished
since July, and a factor "which has spurred some additional technical buying",
Mr Holaday said.
Corn vs wheat
gained too, by 0.9% to $3.53 ½ a bushel for December delivery – helping their
technical credentials a bit by managing to match their contract closing low on
a weekly chart, rather than setting it alone as had appeared likely for much of
Unusually, for recent sessions, it was wheat which underperformed in Chicago, closing down 0.7% at $4.49 ½
a bushel for December delivery, although still closing marginally higher for
The reversal took the wheat premium of wheat over corn,
December basis, back below the key $1.00-a-bushel mark, which the gap had
closed above in the last session for the first time since early August.
Indeed, there was more than a hint of spreading around in
wheat, both against other crops and against Minneapolis-traded spring wheats,
which jumped 1.8% to $6.35 ¼ a bushel, continuing to strength on ideas of a
disappointing-quality Canadian crop, which may only be helping the signs of
buying for higher protein wheat.
Worries over southern hemisphere wheat crops remain live,
with CHS Hedging noting that "Argentina remains wet. Australia remains dry.
"Concerns of crop losses in both areas provide underlying
support to the wheat market."
Among soft commodities, New York-traded arabica coffee futures eased 0.4% to 134.45 cents a pound for December,
extending a retreat from Monday's highs.
The market has had "a negative week," said Brazil's Conselho
Nacional do Café producers' group, saying that price falls "were driven by assessments
of weather Brazilian monitoring in Brazil, where there is possibility of return
of rains in September", which would be a boost to 2018 yield prospects.
Raw sugar futures
for March settled down 0.6%, at 14.64 cents per pound, hurt by expectations of imminent
Brazil Centre South crush data from industry group Unica showing a revival in production
in the first half of this month.
Drier weather is seen having allowed the cane crush to reach
45.98m tonnes in the period, up 18% from volumes in the second half of August,
and a rise of 21% year on year, according to an S&P Global Platts survey of
Sugar output is seen at 3.08m tonnes, up from 2.54m tonnes in
the second half of August, and up 27% year on year.