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Evening markets: softs harden while grains wilt

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It was a tale of two markets – strong softs and weak grains – on Tuesday as investors' reluctance to catch the falling sword of corn and its ilk was only matched by their enthusiasm for sugar.

And much of divergence in fortunes was down to some familiar themes at work.

For sugar, the stocks shortage theme was behind much of the jump of nearly 5% to 28.98 cents a pound in the closing price of New York's March raw sugar contract.

The lot hit 29.06 cents a pound earlier, its highest for 29 years and the putting it within a cent of the 30 cent mark which has been, for months, the subject of "will it, won't it" speculation.

The betting currently seems to favour the former.

"There's just so much impetus behind sugar at the moment, and no signs of supplies coming in to brake the market, that I can't see it falling short," a London trader told Agrimoney.com.

'Long liquidation to come'

For the big Chicago crops, the big theme remained last week's bearish crops data, which have also created an impetus, in a downward direction.

And the prospect that investors might have unfinished selling business, to judge by the length of longs in corn and soybeans.

"There is still a lot of long liquidation that will occur in all of the grain markets," Darrell Holaday at broker Country Futures said.

Ethanol ban

Not that other factors weren't at work to help, say, corn report its sixth successive negative close.

"California passed the low carbon fuel standards," US Commodities said. While not a surprise, this was a reminder of the threat to corn-based ethanol.

"This means in a few years California will ban ethanol. Other states may follow."

March corn closed down 2.25 cents at $3.69 ¼ a bushel.

Tunisian order

Corn weighed on wheat, which ended down 9.5 cents at $5.00 ½ a bushel, a two-month low, having spent much of the day below the $5 mark.

That in turn helped European wheats lower too, with London's March contract ended down £1.10 at £101.25 a tonne and its Paris equivalent down E0.25 at E125.75 a tonne, protected somewhat by a weaker euro.

Of note, Tunisia bought 92,000m tonnes of low grade wheat at $198.49, freight included.

While the origin was not revealed, the wheat "almost certainly to come from Russia", Hugh Schryver at Glencore said, noting that the UK equivalent would have been $20 a tonne more expensive.

Big crop gets bigger

Meanwhile, for soybeans, any hope presented by some wet weather in Brazil was eliminated by thoughts that it had been localised and of limited long-term impact.

Indeed, Oil World, the influential analysis group, weighed in with upgrades to its estimates for both Argentina and Brazil.

And Oil World's Brazil estimate of 64m-65m tonnes may not be the end of the affair.

"Supposedly, Bunge is estimating the crop at 67m tonnes," Vic Lespinasse, at GrainAnalyst.com, said, Bunge being an agribusiness giant with a particularly good knowledge of both Brazil and oilseeds.

Chicago soybeans for March ended down 10.5 cents at $9.73 ½ a bushel.

Cocoa sweetens

Back to softs, cocoa was also helped by the focus of investor interest on crops of which there is genuinely a global shortage.

March cocoa ended $61 higher at $3,461 a tonne in New York. May cocoa ended up £28 at £2,319 a tonne, a one-month high.

By Agrimoney.com

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