Just when investors thought it was safe to get back into farm commodities…
Speculators have turned back towards raising net long positions in agricultural commodities, with the net long in corn up 18% in a week, latest US regulatory data showed.
And there is talk of more money waiting in the wings. "Many in the trade believe new capital is going to be put to work," Brian Henry at Benson Quinn Commodities said.
But not on Monday, in early deals at least.
The date mitigated against big purchases, it being the last trading day of October. End-of-month periods are, by repute, times when funds tidy up portfolios, meaning position closures, ahead of potential buying, which month beginnings are known for.
And if that sounds too wishy washy a reason to sell up, a 1.3% spike in the
The greenback, which last week fell to its lowest since early September, on sales by Japanese authorities of the yen, whose rise of some 40% against the dollar since the start of 2008 is seen as hitting hard the competitiveness of Japanese exports.
And, in reverse, a stronger dollar reduces the appeal of dollar-denominated assets, such as many farm commodities, to buyers in other currencies.
Losses were widely felt. In New York,
Cotton, as a non-food commodity, is viewed as more prone to macroeconomic vagaries.
Furthermore, a weak performance by cotton on the Zhengzhou exchange in China, the top producer, importer and consumer of the fibre, didn't help, with the May lot down 1.2% at 20,255 yuan a tonne.
In Chicago, rough
But futures in the big crops faltered, notably in
OK, there are growing expectations for corn imports by Mexico, the second-ranked buyer of the grain after Japan, following what looks has been the smallest domestic crop in six years.
But set against that is the growing competitiveness of Ukraine as an exporter, with the country believed to have added Taiwan to Japan on its customer list, with trade at $280-290 a tonne, some $35-40 a tonne below US values.
Brazilian supplies are reported in the trade at $5-10 a tonne cheaper than US too.
And that's ahead of a South American crop early in 2011 which is expected to be a big one, although Argentine corn seedings as of late last week were 56% complete, lagging last year's progress by nine points because of dryness in some areas.
Technically, December corn faced a setback in falling short of beating a key level in the last session.
"Futures still need a close over $6.55 a bushel," Mike Mawdsley at Market 1 said, having closed "right on $6.55 a bushel" last time.
And all this may bode ill if Lynette Tan at Phillip Futures is right that the grain looks like making a trend-setting move.
"Looking at the 14-period Bollinger band, we see the upper and lower bound converging to a squeeze and a breakout looks likely. A break-out in either direction could signify a new price direction for the week if there is follow-through buying or selling," she said.
She noted that the grain was "trading below the key moving averages, signalling downside pressure", moving back on Monday below its 200-day moving average.
Its drop was limited in part by its continuing, but atypical, discount to corn, which usually gains a discount for its lower protein levels.
But wheat also had some farmer unfriendly fundamental news to offset another loss over the weekend of US wheat in an Egyptian tender, with Ukraine picking up the spoils of a 120,000-tonne order.
(The order was the first since Egypt, the world's top wheat buyer, three years ago dropped Ukraine from its list of approved suppliers.)
The more bullish news was that rain in Australia is causing troubles for a second season, this time in Western Australia.
"Up to 50mm (2 inches) of rain fell across the majority of the Western Australia grain belt over the past week, disrupting harvest progress in the north," Luke Mathews at Commonwealth Bank of Australia said.
"Conditions need to dry out to allow harvest to resume and to preserve grain quality. However, more rain is forecast for the next eight days."
The oilseed continues to feel some pressure from poor weekly US export sales, and a good start to Brazilian sowings.
Kim Rugel at Benson Quinn also made a noteworthy observation, if failing to say what it might mean.
"The one thing that continues to stand out from the night sessions is that soybean volume has risen sharply in comparison to corn," Rugel said.
"Typically corn volume is double soybean volume on any given night but of late, the last two weeks or so, soybean volume has been nearly double that of corn."