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|Evening markets: Turnaround Tuesday shows up in a weak guise
By Agrimoney.com - Published 30/10/2012
The Turnaround Tuesday theme lost a bit of momentum as the day wore on.
Indeed, wheat ended lower in Chicago for a fourth successive session.
But at least corn and soybeans held on for positive closes, boosted by concerns over the South American crops which, while still in low gear, stepped up the pace a bit, as Oil World cautioned over getting too upbeat, and Michael Cordonnier cut his estimate for Brazil's soybean crop.
'Mostly favourable forecasts'
The fears reflect weather which has been too dry in more northern parts of Brazil, and too wet further south, with overample moisture levels in Argentina too.
Sure, there are ideas that this weather pattern will change.
"Weather forecasts for South American are mostly favourable with the Brazil six-to-10-day outlook for normal rainfall in north central regions aiding planting," Benson Quinn Commodities said.
US Commodities said: "Weather in Brazil and Argentina is expected to improve this week. Moisture is expected in central and northern Brazil."
But in case this looks like consensus, in what has been a disputed South America weather picture, the broker disagreed on the Argentine outlook.
"Southern Brazil and Argentina are expected to dry out," US Commodities said, while Benson Quinn said that "Argentina is expected to continue seeing above normal rains over next 6 to 10-days".
And just to complicate the picture, the Rosario grain exchange said that while drier weather is on its way, it will not last long enough to low farmers to catch up much on rain-delayed soybean and corn plantings.
'Bought soybeans on the price break'
Still, if this left doubts in investors' minds, bulls had some extra ammunition to throw at prices, with further talk of China purchasing US soybeans.
"China has been and continues to be the big soybean buyer which is supporting the market on breaks," US Commodities said.
At Country Futures, Darrell Holaday said that there are "still thoughts that China bought some US soybeans on the price break yesterday."
"News out of Washington, DC is limited," because of closures forced by Hurricane Sandy, but "we would expect a 100,000-tonne sale announcement tomorrow morning".
Thinking of Hurricane Sandy, there was talk too of some damage to unharvested US soybeans, albeit from areas not likely to count big-time in the final production figure.
"As the storm moves inland to Pennsylvania and Ohio some damage to unharvested soybeans is anticipated," Benson Quinn Commodities said.
Furthermore, futures received some support from a strong US cash market - important when there is talk of some deliveries against Chicago futures on this week's first notice day, the start of the expiry process.
And, this time, the idea of Sandy causing funds to sell-up, with agricultural commodities being one market remaining open that they could tap for cash, took a back seat.
Funds were buyers of an estimated 4,000 soybean lots, as well as 5,000 in corn.
Soybeans for November closed up 0.4% at \$15.33 ¾ a bushel, with the better-traded January adding 0.4% to \$15.36 ½ a bushel.
Corn did better still, adding 0.7% to \$7.36 a bushel for December delivery, although some thought the contract could have done better.
Richard Feltes at RJ O'Brien said that the bounce was "somewhat disappointing in view of Argentine planting delays, a pending South Korean corn tender and ongoing strong US cash markets"
The grain would be a particular winner of a poor South American sowing season in that for soybeans, which have a slightly later sowing window, there is more time left for planting.
Furthermore, late soybean sowings would limit the chance of a strong follow-on safrinha corn crop in Brazil, whose bumper levels this year have supported the country's strong exports.
'Still no rainfall'
But wheat was arguably more disappointing still, suffering a late tumble to close down 0.25 cents at \$8.56 ¾ a bushel for December delivery, and more than 1.5% from its intraday highs.
After all, as Darrell Holaday said, the GFS weather model "is still not indicating any rainfall for the hard red winter wheat areas in the next 10 days.
"It is indicating a better opportunity in the 11-13 day area. That is a long way out to have a lot of confidence, given the way the systems have dried up the close we get to them."
Furthermore, the Rosario grains exchange estimated the flooding-beset Argentine crop at 10m tonnes, well below the US Department of Agriculture estimate of 11.5m tonnes, besides a little behind the Buenos Aires grains exchange estimate too.
'Complete lack of export competitiveness'
However, a negative close for Paris, which ended down 0.3% at E262.25 a tonne, knocked some confidence in Chicago, with France and US competing for export business.
(More on export price dynamics will be known tomorrow, when Egypt unveils the results of its latest tender, released after the close of Tuesday's trading.)
London wheat for November ploughed something of its own furrow, adding 0.5% to £209.25 a tonne.
Grain traders at a major European commodities house, said that "a complete lack of export competitiveness on wheat keeps the UK market as a domestic affair for pricing", adding that trade was quiet too, perhaps down to parents taking time off for the school half term.
Among soft commodities, Hurricane Sandy was a factor in a steep fall in arabica coffee prices, which closed down 2.8% at 157.20 cents a pound for December delivery, the contract's lowest finish since late June.
The decline was attributed largely to the removal of premium injected on Tuesday on ideas that the storm surge might breach warehouses containing stocks for delivery against New York contracts, and damage stocks (of which there is precedence).
"The poor development of arabica prices is still being influenced by the after-effects of demand shifting towards robusta following last year's sharp rise in arabica prices," Commerzbank analysts added.
Not that London robusta coffee itself was a top performer, shedding 1.7% to \$1,955 a tonne, the lowest close for a spot contract in nearly five months.
"Following last year's record harvest in Vietnam, the world's biggest producer of robusta, more and more observers expect this year's crop to achieve a similarly high level," Commerzbank said.
New York cotton dropped too, by 2.3% to 70.92 cents a pound for December delivery, in the absence of reports of heavy US crop losses to Hurricane Sandy.
Indeed, early weakness, in pushing the contract down through its 100-day moving average line at 72.91 cents a pound, only encouraged further selling by technically-focused investors.
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