12th Oct 2012, by Agrimoney
"Awful" US export sales data, and the prospect of a strong weekend of the US harvest, fuelled a slump in grain and oilseed prices which saw corn and soybeans lose all their gains of the last session.
Markets had started the day on the back foot anyway, as investors preferred profit-taking on their large net long positions to holding on, even following the upbeat comments which followed Thursday's US Department of Agriculture Wasde crop report.
"Follow-through buying did not develop despite many in the trade preaching that yesterday's data was near-term and long-term bullish for all three commodities," as in corn, soybeans and wheat, Benson Quinn Commodities said.
"Large speculative positions in corn and soybeans continue to offer some resistance to these markets."
'An embarrassment'
And the selling shifted up a gear or two after weekly US export sales data came in well short of expectations – including for soybeans, which have made a virtue of strong foreign demand.
Benson Quinn termed the data - 500,700 tonnes for soybeans, 297,000 tonnes for wheat and 4,200 tonnes for corn - as "awful".
US Commodities called them "poor".
At Country Futures, Darrell Holaday said the data were "negative" adding that that "the corn number was an embarrassment. I think we would have felt better if they had printed a zero".
Prices drop
The reaction in Chicago was hardly upbeat, especially with another harvest weekend ahead, meaning more supplies for buyers.
And many technical pointers were not too impressive either. Corn for December, in closing down 2.9% at $7.50 ¾ a bushel, fell below its 10-day moving average, while December wheat in dropping 2.7% to $8.56 ¾ a bushel ended below 10-day and 50-day lines.
November soybeans, by closing 1.7% lower at $15.22 ½ a bushel surrendered again the 100-day moving average they regained in the last session.
Other markets followed suit, with Paris wheat ending down 1.8% at E258.75 a tonne, and rapeseed 1.2% lower at E474.25 a tonne.
London wheat lost 1.2% to £199.65 a tonne.
'Prices will have to work higher'
Still, even among the gloom, there was hope that this represented more of a one-off shift downward than a lasting trend (although US export data may have a big say in that).
"As harvest is completed in more and more areas, futures prices and/or basis levels, and probably a combination of both, will have to work higher to secure more production" in pipelines, Benson Quinn said.
"The prospects of tightening supplies should continue to provide support near these levels, but the catalyst required to trigger upward momentum prior to a harvest weekend is missing at this point."
Country Futures' Mr Holaday said, of soybeans: "The technicals point lower, but the fundamentals do not really indicate values below $15.00 a bushel."
2013 outlook already
Wheat had its share of champions, with the likes of Credit Suisse, Goldman Sachs and Societe Generale singing the grain's praises, and Barclays Capital late on too.
"Looking ahead, we anticipate further downward revisions to global supplies and an uptick in wheat demand for feed which will support prices," BarCap's Sudakshina Unnikrishnan said.
And Richard Feltes at RJ O'Brien banged the drum for corn.
"Stable corn production yesterday [in the Wasde], firm cash corn and a 'too wet' Argentina outlook next week should provide a floor to the corn market which for the week, even after setback today, is still up about 10 cents on the week," he said.
Furthermore, looking ahead to next year's crop, he said he was "hearing more chatter about deficit sub-soil moisture reserves in the western Midwest".
This means that "private sector analysts may be reluctant to use 160 bushels per acre or higher 2013 US corn yield forecasts given the experience of the last three years and concern over existing moisture deficit".
'Where are the real buyers?'
In New York, raw sugar traded lower too, continuing to lose support on ideas that prices have become too high to uncover demand.
"The chat from the trade seems to be the bulls need to see a reaction from the end users/ buyers to the recent slide as the question now - following rumoured washouts this week - is who are, and where are, the real buyers," Thomas Kujawa at Sucden Financial said.
Raw sugar for March dropped 1.5% to 20.05 cents a pound.
To be fair, downward movement was in line with the commodities sector has a whole too, with the CRB index ending down 0.8%.
Harder softs
Still, cotton managed upward movement, despite Thursday's Wasde throwing yet more negative fundamental news at the fibre, and indeed puzzling some investors.
New York's December lot added 0.9% to 71.36 cents a pound.
And coffee for December added 0.6% to 161.70 cents a pound, rebounding from around the bottom of its trading range, a point seen encourage end-user buying, as opposed to the producer selling which has prevented the lot staying for long above 180 cents a pound of late.
"Awful" US export sales data, and the prospect of a strong weekend of the US harvest, fuelled a slump in grain and oilseed prices which saw corn and soybeans lose all their gains of the last session.
Markets had started the day on the back foot anyway, as investors preferred profit-taking on their large net long positions to holding on, even following the upbeat comments which followed Thursday's US Department of Agriculture Wasde crop report.
"Follow-through buying did not develop despite many in the trade preaching that yesterday's data was near-term and long-term bullish for all three commodities," as in corn, soybeans and wheat, Benson Quinn Commodities said.
"Large speculative positions in corn and soybeans continue to offer some resistance to these markets."
'An embarrassment'
And the selling shifted up a gear or two after weekly US export sales data came in well short of expectations – including for soybeans, which have made a virtue of strong foreign demand.
Benson Quinn termed the data - 500,700 tonnes for soybeans, 297,000 tonnes for wheat and 4,200 tonnes for corn - as "awful".
US Commodities called them "poor".
At Country Futures, Darrell Holaday said the data were "negative" adding that that "the corn number was an embarrassment. I think we would have felt better if they had printed a zero".
Prices drop
The reaction in Chicago was hardly upbeat, especially with another harvest weekend ahead, meaning more supplies for buyers.
And many technical pointers were not too impressive either. Corn for December, in closing down 2.9% at $7.50 ¾ a bushel, fell below its 10-day moving average, while December wheat in dropping 2.7% to $8.56 ¾ a bushel ended below 10-day and 50-day lines.
November soybeans, by closing 1.7% lower at $15.22 ½ a bushel surrendered again the 100-day moving average they regained in the last session.
Other markets followed suit, with Paris wheat ending down 1.8% at E258.75 a tonne, and rapeseed 1.2% lower at E474.25 a tonne.
London wheat lost 1.2% to £199.65 a tonne.
'Prices will have to work higher'
Still, even among the gloom, there was hope that this represented more of a one-off shift downward than a lasting trend (although US export data may have a big say in that).
"As harvest is completed in more and more areas, futures prices and/or basis levels, and probably a combination of both, will have to work higher to secure more production" in pipelines, Benson Quinn said.
"The prospects of tightening supplies should continue to provide support near these levels, but the catalyst required to trigger upward momentum prior to a harvest weekend is missing at this point."
Country Futures' Mr Holaday said, of soybeans: "The technicals point lower, but the fundamentals do not really indicate values below $15.00 a bushel."
2013 outlook already
Wheat had its share of champions, with the likes of Credit Suisse, Goldman Sachs and Societe Generale singing the grain's praises, and Barclays Capital late on too.
"Looking ahead, we anticipate further downward revisions to global supplies and an uptick in wheat demand for feed which will support prices," BarCap's Sudakshina Unnikrishnan said.
And Richard Feltes at RJ O'Brien banged the drum for corn.
"Stable corn production yesterday [in the Wasde], firm cash corn and a 'too wet' Argentina outlook next week should provide a floor to the corn market which for the week, even after setback today, is still up about 10 cents on the week," he said.
Furthermore, looking ahead to next year's crop, he said he was "hearing more chatter about deficit sub-soil moisture reserves in the western Midwest".
This means that "private sector analysts may be reluctant to use 160 bushels per acre or higher 2013 US corn yield forecasts given the experience of the last three years and concern over existing moisture deficit".
'Where are the real buyers?'
In New York, raw sugar traded lower too, continuing to lose support on ideas that prices have become too high to uncover demand.
"The chat from the trade seems to be the bulls need to see a reaction from the end users/ buyers to the recent slide as the question now - following rumoured washouts this week - is who are, and where are, the real buyers," Thomas Kujawa at Sucden Financial said.
Raw sugar for March dropped 1.5% to 20.05 cents a pound.
To be fair, downward movement was in line with the commodities sector has a whole too, with the CRB index ending down 0.8%.
Harder softs
Still, cotton managed upward movement, despite Thursday's Wasde throwing yet more negative fundamental news at the fibre, and indeed puzzling some investors.
New York's December lot added 0.9% to 71.36 cents a pound.
And coffee for December added 0.6% to 161.70 cents a pound, rebounding from around the bottom of its trading range, a point seen encourage end-user buying, as opposed to the producer selling which has prevented the lot staying for long above 180 cents a pound of late.
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