Sure, hopes of a wave of interest flowing into agricultural commodities failed to materialise (on the long side, at least).
But it could have been worse for ag bulls.
While the Bcom ag sub index dropped 0.6%, that was a lot less severe than the 1.6% loss in the headline cross-commodities index.
It was also better than many share markets managed too, with London’s FTSE 100, for instance, ending down 1.1%, although there was some hope of recovery in Wall Street stocks, with the Dow Jones industrial average up 0.2% in late deals.
In fact, not all ags ended lower, despite headwinds such as a firmer dollar, which added 0.3% against a basket of currencies, making dollar-denominated exports less affordable.
New York raw sugar for March added 0.7% to 13.67 cents a pound, amid supportive talk on sugar prices from some Brazilian cane crushers, and some ideas that data later on hedge fund positions may still show a large net short.
The market was also notable for a large rise in the premium of the March lot over the May contract, which ended down 0.3% at 13.55 cents a pound.
The behaviour was reflected in the London white sugar market too, where the soon-to-expire February lot added 1.1% to $354.70 a tonne, compared with headway of 0.4% to $358.50 a tonne in the May contract.
Often, such behaviour reflects ideas of buyers taking advantage of expiry to buy large amounts of physical sugar through the futures market.
‘Dry areas of Argentina to swell back’
In Chicago, soymeal for March gained too, by 0.7% to $343.80 a short ton, a one-year closing high for a spot contract.
The feed ingredient has proven particularly sensitive to the outlook for weather in Argentina, the top exporter, where dryness is testing soybean and corn crops.
And while “showers are expected to favour central Argentina today and northern Argentina this weekend,” this rainfall “should lead to only minor improvements in soil moisture across central Argentina”, weather service Radiant Solutions said.
“While central Argentina will see some improvements over the next 15 days, southern Argentina will see little improvement.”
Richard Feltes at broker RJ O’Brien flagged “prospects for dry areas of Argentina to swell back to one-half of crop area versus one-third still dry upon completion of the recent rain system”.
Still, soybeans themselves eased by 0.4% to $9.83 a bushel in Chicago for March delivery, amid some talk of a hangover from Thursday’s US Department of Agriculture Wasde briefing, which raised the forecast for US carryout stocks of the oilseed from 2017-18 by more than investors had expected.
“Despite the firm tone in beans after the report, I believe there is some hangover from the bigger-than-expected ending stocks estimate,” Benson Quinn Commodities said.
Tregg Cronin at Halo Commodity Company said that US “crush demand remains solid in soybeans, but export demand still leaves plenty to be desired”.
Wheat futures fared notably worse, dropping by 1.5% to $4.49 a bushel for Chicago soft red winter wheat for March, and by 1.9% to $4.65 ½ a bushel for the March Kansas City hard red winter wheat lot, which fell back below its 200-day moving average.
The decline reflected in part ideas of, some, much-needed precipitation in the southern Plains, hard red winter wheat country.
“Look for light precipitation over a good portion of the US hard red winter wheat areas through Saturday,” said Terry Reilly at Futures International.
The basis response highlights the fact wheat still needs demand at these higher futures levels, something which is very tough to argue at the moment.
Six-to-10 day and 11-to-15 days outlooks have trended a little wetter in some areas, Radiant Solutions said.
‘Wheat still needs demand’
However, there were also worries that too much demand may being destroyed at elevated values, with cash markets weakening in a bid to attract trade buyers.
“The basis response highlights the fact wheat still needs demand at these higher futures levels, something which is very tough to argue at the moment,” Halo’s Tregg Cronin said.
A tender by Egypt reminded of lower values from the Black Sea, with the Gasc authority buying 360,000 tonnes of wheat, at prices from $206.60-208.43 a tonne, on an FOB basis.
Still, Gasc also, unusually, bought from an origin other than Russia, purchasing 120,000 tonnes from Romania.
Those was only the second and third non-Russian cargos bought by Gasc since late August – more than 2m tonnes of orders ago.
The poor performance of wheat was one drag on rival grain corn, which closed down 1.0% at $3.62 a bushel for March delivery.
But so was talk of cancellations by Chinese buyers of orders of US corn, in favour of Ukrainian supplies – a switch apparently spurred by a clampdown by Chinese authorities on imports of genetically modified varieties.
“China was said to have cancelled as many as four cargoes of US corn,” CHS Hedging said.
Tregg Cronin flagged that while there was “improved US export demand in corn”, as evidenced by recent export data, “there remains plenty of old crop corn for sale above the market”.