Has the negative tide in grain and oilseed markets turned at last?

Late deals in Chicago gave bulls hope, with soybeans in particular pulling off a remarkable recovery from a three-month low of \$15.04 a bushel reached earlier to stand at \$15.33 ¾ a bushel with some half an hour's trading to go, a gain sure of a modest 0.2% on the day, but looking for its first positive close of the week.

It represented the second recovery in the oilseeds sector on Wednesday, after palm oil futures staged a more speculator revival in Kuala Lumpur.

And if there is something more long-lasting in soybeans at work, you could just about set your calendar by it, if not your watch.

'Seasonal buy day'

Analysts have long been cautioning, as soybeans dropped from their record high of \$17.94 ¾ a bushel reached a month ago, that prices typically bottom out in the first week of October.

While not precluding a further leg down, prices at least then begin to see a waning in the US harvest pressure caused by the spike in supplies brought by the rolling of combines.

And in fact, "the market is nearing the seasonal buy day", broker US Commodities said.

"Historically you are to buy November soybeans October 4 until October 20, and 80% of the time the market goes up," with a typical gain of \$0.42 a bushel.

'Better precipitation prospects'

What might give thoughts of a revival credence are that they are coming in the face of what looked like a big technical blow earlier, when the November soybean contract dropped below its 100-day moving average, at a little under \$15.29 a bushel, for the first time since June.

That was a much-commented-on technical nay sign.

Steve Georgy at Allendale said earlier in the day: "Soybeans may target the gap near \$14.80 a bushel next if we are unable to rebound in the next few days."

Furthermore, the negative fundamental news kept coming in with rains boosting prospects for South American sowings of the oilseed.

Richard Feltes at RJ O'Brien said: "Weather reads negative today with, better precipitation prospects across Matto Grosso, Brazil," besides "mostly open US harvest weather over next 10 days" to  keep supplies off the combine ticking over.

'Part of the buying problem'

And this after FCStone overnight raised its forecast for the US soybean crop to 2.849bn bushels, 215m bushels more than the US Department of Agriculture is currently factoring in.

FCStone put the yield at 38.2 bushels per acre, an upgrade of 2.9 bushels per acre on the USDA figure.

On the demand side too, export orders have been soft, with the top buyer sidelined.

"The expectations for exports this week will most likely remain low since China has been on holiday," Steve Georgy at Allendale said.

US Commodities said: "This is part of the buying problem. Our largest soybean buyer is out of the market," until October 8.

But providing extra support for buying was talk of a strong recovery in basis levels on the US cash market.

Tender thoughts

With soybeans turning, investors looked more favourably on grains too, including wheat, after some positives in the latest Egyptian tender.

On the positive side for prices, there were no Russian supplies offered, meaning what is usually a strong source of competitive wheat is sidelined for 2012-13.

Furthermore, while most of the 240,000 tonnes of Egyptian business went to French wheat, it was at prices which some US grain, at \$340 a tonne, could have beaten, were it not for the extra costs of reaching Egypt from the Gulf of Mexico.

The bad news was the appearance of Argentina instead on the roster, with prices as low as \$333.68 a tonne.

Wheat recovered to stand 0.1% higher at \$8.72 ½ a bushel for December delivery.

Canola rebound

Corn staged a modest revival too, still feeling harvest pressure, besides an FCStone estimate for the US crop of 10.824bn bushels, some 100m bushels higher than the USDA believes.

This at a time when many analysts believe that the crop warrants a further downgrade, to account in part for greater abandonment levels than currently being factored in.

Chicago's December lot stood 0.1% higher at \$7.59 a bushel, having touched \$7.47 a bushel earlier.

For recoveries, back in the oilseeds sector, that of Winnipeg canola was far more impressive, with the November lot falling to a seven-month low, for a spot contract, of Can\$577.80 a tonne, only to recover to Can\$592.90 a tonne in late deals, a 1.8% gain on the day.

Softs soften

What made the revival more impressive was that they came on a weak day for many commodities, with the CRB index tumbling 1.6%, amid the usual concerns over Chinese and eurozone economics, but with jitters over the major raw materials country of Australia throw in too, following weak trade statistics.

Brent crude dropped more than 3%, back below \$108 a barrel, while the safe haven of the dollar added 0.3%, weakening the competitiveness of dollar-denominated exports such as many commodities.

Indeed, soft commodities had a poor day too, with raw sugar breaking its winning run to edge 0.01 cents lower to 21.58 cents a pound for March delivery.

New York coffee for December fell 1.4% to 181.05 cents for December delivery as concerns over dry weather in Brazil eased, fears which helped prices to a 10-week high earlier.

And London cocoa for December dropped 2.2% to £1,564 a tonne, the lowest close since late July, as concerns waned here too, over the impact of marketing reforms by Ivory Coast, the top producing country, which had appeared to show some teething problems.