RSS
Twitter
Linked In
News In
Markets
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Morning markets: grain futures stage Tenacious Tuesday

Twitter Linkedin

Standard & Poor's, having like other ratings agencies been late on the last markets crisis, has been bang on time for this one.

The liquidation supercharged by the ratings agency's downgrade of America's sovereign debt rating extended into Tuesday, driving shares lower, with Japan's Nikkei index closing down 1.7% and South Korea's Kospi index 3.6% lower.

New York

crude

was 1.6% lower at $80.05 a barrel as of 07:30 GMT (08:30 UK time).

Tight rice

But there were two sources of hope for investors of bullish aspect.

One that shares at least closed well off their lows. The Kospi, for instance, was down nearly 10% at one point. Also,

crude

touched $75.71 a barrel earlier, a level not seen in a spot contract since September.

The second is that crops were attempting something of, if not the Turnaround Tuesday of Chicago lore, which reverses a strong trend set in the last session, at least a Tenacious one.

Sure rough

rice

was hardly representative of Chicago grains in adding 2.6% to $16.69 a hundredweight for September. The lot has now gained getting on for 4% this month.

"Chicago rice prices have risen on a decline in yield and acreage, which has led to a record reduction in the US rice balance sheet," Abah Ofon at Standard Chartered said, noting that the US Department of Agriculture is forecasting a 23% drop in domestic output this year to a 13-year low of 187.0m hundredweight.

Rubber stretched

But many other crops were in positive territory too.

The poor performance of the non-food or feed farm commodities highlighted one reason for grains', relative, strength – the appeal of the "everyone has to eat, whatever the economic outlook" play.

It was notable that

cotton

, one major non-edible crop, was a weak performer, losing 1.5% to 97.50 cents a pound for September, if a more modest 0.3% to 97.45 cents a pound for the December lot.

Rubber

, another crop more sensitive to broader economic factors, tumbled 4.2% to 354.80 yen a kilogramme in Tokyo.

Inflation factor

But investors may also be taking note of commodities' appeal during a period of high inflation, given that there is little likelihood in such fragile economic times of Western interest rates rising, even if price rises prove more than ideal.

Commodities are generally viewed as relatively inflation proof, being the kind of assets whose prices are rising. The prospect of a further round of quantitative easing, keeping cheap money flowing, would only highlight such considerations.

Then there is, on Thursday, the USDA Wasde crop report, the latest in the influential monthly series, which looks particularly important this time in revising US

corn

yield and acreage figures.

"Grains and soybeans should find some support Tuesday/Wednesday as trade starts to square positions ahead of USDA on Thursday," Benson Quinn Commodities said.

'Concerns with corn pollination'

And this before getting to the weekly update on the conditions of US crops, which was less controversial this time in producing downgrades at least in line with market expectations, following unduly hot weather.

The proportion of corn rated in "good" or "excellent" condition fell two points to 60%, while the rating on spring wheat was slashed by four points, for a second week, to 66%. A year ago, the figure was 82%.

"The [condition of] the Illinois crop fell for the fourth consecutive week as hot and dry weather remained across the state," Paul Deane at Australia & New Zealand Bank said.

"We are hearing more about concerns with corn pollination regardless if rain was adequate or not," Mike Mawdsley at Iowa-based broker Market 1 noted.

Chicago corn for December 0.1% higher at $6.86 ½ a bushel, while September

wheat

gained 0.7% to $6.61 ¼ a bushel.

Weak oilseeds

Soybeans

were the weakest of the three Chicago majors, down 0.6% at $13.03 ½ a bushel, pressed by an improvement in the condition of the US crop.

The proportion rated good or excellent added one point to 61%.

That was little help to oilseed complex peer

palm oil

, which stood 0.6% lower at 2,977 ringgit a tonne in Kuala Lumpur, having touched a fresh nine-month low of 2,920 ringgit a tonne earlier.

In France, Agritel also highlighted the sensitivity of oilseeds, feedstocks for biodiesel plants, to crude prices.

In Paris trading on Monday, "the toughest decrease was posted by

rapeseed

, as it is correlated to oil", the consultancy said.

By Agrimoney.com

Twitter Linkedin
Related Stories

Evening markets: South American double whammy brings ags back down to earth

Ags lose early gains, undermined by a tumble in Brazil’s real, and falling rain in Argentina. Still, wheat futures remain in positive territory

Morning markets: Hard wheat regains premium over soft, amid US dryness worries

Kansas City wheat outperforms, as Plains precipitation worries extend to a dearth of snow cover. But Kuala Lumpur palm oil hits a 16-month low

Evening markets: Ags gain, as funds begin to get that year-end festive mood

Ag prices recover, helped by the likes of more positive comment on US export competitiveness, and some more negative talk on Argentine rains

Morning markets: Grains stage a recovery. Will it last?

Corn, soybean and wheat futures start Wednesday making headway which has been difficult to come by of late. Cotton gains too
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069