Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Evening markets: second Goldman blow puts crops on back foot

Twitter Linkedin eCard

It's not only the postman who knocks twice.

Goldman Sachs does too, following its recommendation earlier in the week to take profits on commodities with an even more bearish one, to go underweight.

In fact, agricultural commodities were spared the investment bank's wrath. Goldman said that low stocks would keep prices of the likes of corn and, especially, soybeans, supported.

But after the commodities sell-off that Goldman's first report caused, or at least was blamed for, the latest briefing presented a negative backdrop to Friday.

"The bull commodity story is losing momentum," broker US Commodities said, noting the determination by China to get its higher-than-expected inflation, revealed today at 5.4%, under control.

"China and other countries are trying to stall food inflation. You have to bet they get it done.

"Interest rates around the world are rising." And that implies lower economic growth, and a setback to demand for raw materials, right?

Feed switch?


, investors' favourite until late, bore the brunt of selling this time, as prices still within the district of the record high hit earlier this week encouraged further profit taking.

Furthermore, the US Department of Agriculture's idea that livestock farmers might switch from corn to wheat is beginning to be taken more seriously.

"Corn is now challenged by future wheat feeding as soft red winter wheat [the type traded in Chicago] has gone to a discount to corn," US Commodities said.

Corn remained at a premium on Friday, but not by much, after falling 1.1% to $7.45 ¾ a bushel in late deals.

Chicago wheat was 0.3% higher at $7.43 a bushel.

Crowded spread

At least wet weather was in corn's favour, potentially slowing spring sowings, and helping the new crop December lot add 0.5 cents to $6.56 a bushel.

Darrell Holaday at Country Futures said: "The wet conditions and forecast in the Midwest are leading to another significant round of liquidation in the bull corn spreads." That is an unwinding of a strategy of buying the short-term lots, and selling those further ahead.

"There were just way too many people in that spread and they need out. Look for it to bottom today or Monday."

Washed out

The wet weather remained, however, a setback to prices of Kansas-traded hard red winter wheat which, promising some relief to a crop badly needing rain. Kansas's May lot eased 0.1% to $8.63 a bushel.

New crop


too, which needs rain for the main growing state of Texas, was out of favour, dropping 2.0% to 129.87 cents a pound In New York for December delivery.



returned to a pattern of modest gains, helped by the unwinding of buy corn, sell soybean spreads, as well as help from Goldman, which kept the oilseed as one of its two hold recommendations.

Chicago's May contract stood 0.4% higher at $13.36 ¾ a bushel with half an hour of so of trading to go.


Twitter Linkedin eCard
Related Stories

Evening markets: Soybean futures gain, cotton prices jump on US data

Initial USDA forecasts for crop supply and demand for 2018-19 lift soy and cotton prices, but are not so well received in the cotton market

Weekly grain market view from Europe, February 23

EU cold snap could damage crops... UK market prices in closure of Vivergo ethanol plant... Rising Russian wheat prices...

Evening markets: Argentine moisture slips up soymeal rally. But weather revives wheat

Meal futures dip, a little, for the first time in 12 sessions. But wheat futures gain, as drought spreads in Kansas, and cold reaches Europe

Morning markets: Ag futures ease, as traders await key 2018 forecasts

US officials will later on Thursday issue the first of a series of forecasts for US crops in 2018-19. Markets are cautious in the mean time
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069