Agricultural commodities outperformed to end the week.
OK, gains were not universal, with raw sugar for March, for
instance, slumping by 2.9% to close at 13.98 cents a pound in New York, largely
thanks to technical factors, after the contract failed earlier to break above a
clutch of moving averages around the 14.40-14.50 cents a pound mark.
Indeed, many are talking of the market as rangebound, with Commonwealth
Bank of Australia, for instance, earlier this week flagging that "sharp moves
up and down keep on petering out to nothing as reversal follows reversal".
However, elsewhere in New York, cotton for December added 1.3% to 69.16 cents a pound in late deals, as the
forecast route of Hurricane Nate took it back further east through Georgia, the
second-ranked US cotton-producing state, and into much of south Carolina too.
And arabica coffee
futures for December settled up 2.2 % at 130.00 cents a pound, as worries revived
over dryness in Brazil's key growing state of Minas Gerais.
The CNC producers' group said that while rains last weekend
had eased worries over hot and dry weather, during a period when trees are
undergoing the sensitive blossoming period, "the volume of rainfall" that
plantations have received of late "is still considered weak".
"The trade is keeping a close eye on forecasts for the next
few weeks, when fresh blossoming should occur."
'La Nina is coming'
At Price Futures, Jack Scotille said that "the weather in
Brazil and the condition of the trees is getting attention as La Nina is coming
and coffee areas are already dry".
However, forecasts are devoid of rainfall for many parts of
central Brazil (and, indeed, La Ninas have a reputation for causing dryess in
MDA said that "showers should return to north western Mato
Grosso, southern Mato Grosso do Sul, Parana, Santa Catarina, and Rio Grande do
Sul today through Tuesday", with Minas Gerais not on the list, and dryness seen
extending there for at least 10 days.
(Somar Meteorologica has said that rainfall may occur this
weekend in the south of Minas Gerais.)
'Every forecast is
In grain markets, Brazil's dryness is garnering attention in
particular in the soybean market, with sowings of the oilseed ongoing, but
delayed by dryness concerns.
"The weather issue in South America still in play, as every
forecast is scrutinised," said Benson Quinn Commodities.
CHS Hedging noted that oilseeds industry group Abiove "is projecting
the Brazilian soybean crop at 108.5m tonnes, down from last month's estimate of
However, headway in Chicago futures was limited by the
prospect of rains in key Brazilian growing areas, notably parts of Mato Grosso.
Furthermore, there were some nerves as to how markets in
China, the top soybean importer, will react when they reopen on Monday after a
holiday of more than a week.
Chicago soybean futures for November stood up 0.2% at $9.70
a bushel in late deals, although still just in credit for the week.
'Wet weather will
underperformed on both scores, up just 0.1% at $3.49 ¾ a bushel for December
delivery, and down for the week – looking indeed at a contract closing low on a
Sure, there will be some US harvest disruptions from rains
this weekend, with CHS Hedging, for instance, noting that "wet weather will
delay harvest for much of the Corn Belt".
Benson Quinn Commodities said that "Midwest US weather still
calling for a good soaking followed by better conditions later this weekend and
into next week".
Furthermore, on the plus side for prices, the US Department
of Agriculture unveiled the sale of 195,000 tonnes of US corn for export, to an
However, it appears that speculators may have it in for the
grain, to judge by the rise in open interest (ie the number of live contracts)
at a time of price softness.
"Corn open interest has risen 136,835 contracts since August
30," Tregg Cronin at Halo Commodity Company said.
Spring wheat springs
better in Chicago, adding 0.5% to $4.42 ¾ a bushel, helped by further signs of
revival in the Minneapolis spring wheat
market, following its drubbing a week ago on higher-than-expected US production
The spring wheat market has taken a higher profile this
year, thanks to shortages of higher protein wheat which have hardly been helped
by US drought.
Halo's Tregg Cronin termed it "worth pointing out the
improving technical and fundamental picture of Minneapolis spring wheat".
US export sales data for last week, revealed on Thursday, "notched
the highest level in seven weeks and were the second largest of the marketing
year," he said.
"Price has also found support from the 200-day moving
average which we touched Monday through Thursday of this week and held.
"Further, various studies of momentum are indicating a potential
bullish divergence," but would require moving back above $6.50 a bushel to
Minneapolis spring wheat futures for Deceber stood up 1.0%
at $6.21 ½ a bushel.