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Evening markets: corn, orange juice miss end-of-week retreat

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Corn

maintained its poise, extending to seven sessions its run without a losing session in Chicago.

But other farm commodities found the going tougher on Friday, as the fund buying which has marked many previous sessions took a break, ahead of the weekend and, of course, the end of the month, when many investors often tidy up their books by closing positions.

Furthermore, disappointing US economic data, showing growth running at a rate of 2.8% in the September-to-December period, a little lower than market expectations, took some wind out of bulls' sails – if not all.

"The GDP was certainly below expectations, but it also fuels more talk about a third round of quantitative easing from the Federal Reserve," Darrell Holaday at Country Futures said.

"That provides a bid on the commodity sector," with easier money seen as boosting demand, and the chances of inflation which it typically kinder to raw materials than many other assets.

Softs soften

New York raw

sugar

was notably weak, dropping 2.1% to 24.21 cents a pound for March delivery, sapped in part by a decline in white sugar premiums in Thailand, the second–ranked sugar exporter, amid ideas of better supplies.

Indeed, noting the forthcoming the annual keynote sugar conference in Dubai, "it's hard to imagine they will leave Dubai 'sugar bulls'", Thomas Kujawa at Sucden Financial said.

And

cocoa's

winning run came to an end, with New York's benchmark March contract closing down 1.9% at $2,406 a tonne, with sentiment weakened by the contract's failure to take on its moving average, at $2,490 a tonne.

The lot rose to $2,480 short only to lose its nerve, provoking doubts about how much strength the cocoa rebound has.

'Weather continues to improve'

And in Chicago, the default move was downwards too, with momentum for

soybeans

not helped by ideas of better weather ahead, after drought in Argentina and southern Brazil for much of the last two months.

"The weather in South America continues to improve," US Commodities said.

"The Argentina corn crop has stabilised. It now appears the crop is near 22m-23m tonnes versus the extreme low values of 17m-18m tonnes."

Benson Quinn Commodities said that "estimates of lower soybean production in southern Brazil states of Parana and Rio Grande do Sul and Argentina are supportive.

"But with harvest weather improving the thoughts of a shift in near-term exports from Brazil to the US are fading and are pressuring the front month contracts with US amply supplied into the new marketing year."

Soybeans for March closed down 0.3% at $12.22 ¾ a bushel.

Heavy stocks

Wheat

for March ended down 1.0% at $6.47 ¼ a bushel in Chicago, as the Canadian Wheat Board sounded a note for bears by issuing a reminder of a strong stocks already in place, and the generally upbeat prospects, thus far, for northern hemisphere wheat.

And fears for winterkill from a freeze in the former Soviet Union, including Ukraine as well as Russia, took more of a back seat.

"The market is less concerned with the cold snap in the winter wheat areas of Russia this morning. The temperatures are somewhat warmer," US Commodities said.

Enough snow?

Not that all observers were exactly unconcerned, including those at the UK grain desk of a major European commodities house, with strong interests in the Black Sea, whose said that while Ukraine "has good snow cover", meaning protection from frost, "there is less certainty about southern parts of Russia".

The traders added: "There has been snow fall recently in the area but we simply don't know whether there is enough.

"As usual with winterkill threats, we won't know if any damage is done until crops start to grow in the spring."

Indeed, Paris wheat did better, closing only 0.1% lower at E209.00 a tonne for March. London wheat for May, the best-traded lot, edging £0.05 higher to £165.55 a tonne.

Basis tow

However, corn did better still in Chicago, closing up 1.1% at $6.41 ¾ a bushel for March, helped by the muscle-bound US cash market, which is being boosted by, well…

The University of Illinois said the strength of cash corn could reflect the fact that demand for the grain from livestock farmers is, after all, stronger than the US Department of Agriculture has estimated.

(US grain stocks data has persistently come in above market expectations, a factor the USDA has pinned on weakened livestock demand, but which many commentators believe is a statistical error.)

Societe Generale noted stronger-than-expected US export data, which topped 1m tonnes in the last week, including 2011-12 and 2012-13 years. And Mexico was on Friday revealed to have bought a further 170,000 tonnes of US corn.

Whatever, "the corn cash market is on fire", Benson Quinn Commodities said, but futures did their best to close the gap of $0.30 a bushel that the University of Illinois believes futures appear undervalued compared with cash.

Juice tests positive

New York

cotton

was also a winner – just – in New York, adding 0.02 cents to 95.61 cents a pound for March delivery at the end of a difficult week, but in line with the theme of some end-of-month position closing.

The prospect of China, the top importer, returning from holiday next week helped.

"China and Asia will be back next week after the Chinese lunar new year. The trade is hopeful new demand will emerge," US Commodities said, and for many crops.

And

orange juice

closed up 2.1% at 210.90 cents a pound for March delivery after US test results on orange juice imports showed positive for a banned fungicide, leading authorities to detain three shipments of Brazilian juice, and six from Canada.

By Agrimoney.com

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