4th Oct 2012, by by James Moore, Agrimoney
Bears lost a little bit of their grip on agricultural commodities,on oilseeds at least, which found the oomph to escape the downdraft which has held them for the last month.
Thursday proved to be a broadly positive day for commodities anyway following positive jobs and factory orders data from the US, and a renewed pledge by the European Central Bank that it stands ready to buy bonds if required.
On the wider spectrum, the CRB commodities index finished 1.3% higher.
On the narrow one signally for Chicago watchers, a low-profile crop seen as a leading indicator, oats, enjoyed a strong day, ending 2.1% higher at $3.70 ¾ a bushel for December delivery.
'Seasonal/historical day…'
Still, it was on soybeans that traders were really focused, to see whether October 4 could again bring a rebound, as it has had an uncanny knack of doing so in the past.
"Today is the seasonal/historical day that soybeans and soybean meal are to be bought," US Commodities said.
So it was, with Chicago's November lot ending up 1.2% at $15.51 ½ a bushel, and not just for reasons of history.
For one, oil prices, a key influence on commodities such as soyoil used in making biodiesel, were underpinned by the clash between Syrian and Turkey forces.
(For that matter, gold touched its highest level in a year just shy of $1,800 ounce amid a continued influx of investment interest.)
'Very strong number'
But there were reasons within the oilseeds complex too, not least a storming week for US exports, with sales coming in at 1.3m tonnes, ahead of forecasts of at best 900,000 tonnes.
"This is a very strong number," Darrell Holaday at Country Futures said,
"With all of the talk about increased yields," or at least of the US harvest proving less bad than feared, "the most important fundamental aspect of the soybean market is the strong demand".
US Commodities said: "The stage is set for larger supplies versus a larger demand, adding that "thus far no signs of rationing are occurring in the soybean exports or crush".
Canola downgrade
And there was unexpected support from north of Chicago, in Canada, where officials estimated the domestic canola crop at 13.4m tonnes - well below expectations of a figure of some 15m tonnes.
Disease and poor weather had taken their toll, Statistics Canada signalled, sending prices of the oilseed itself 1.0% higher in Winnipeg, to Can$606.50 a tonne.
In Paris, rapeseed for November delivery soared 3.6% to E482.50 a tonne for its first positive close of the week.
'Important fundamental signal'
But could the benefit feed through into other crops?
Bears did find the strength to bring corn back from earlier highs to a negative finish, down 0.5 cents at $7.57 a bushel.
The grain had been helped by export sales of 327,000 tonnes which, while nothing to write home about in historical terms (a year ago the figure was 1.3m tonnes) were bumper by recent standards.
Indeed, they were the best for eight weeks, and eased some of the demand doubts fostered by soft ethanol data on Wednesday.
And some movements in spreads had helped too.
"One of the important fundamental signals in the corn and soybeans is the inversion that we have now seen develop between December and March corn contracts and November and January soybean contracts," Mr Holaday said.
"This is always a strong fundamental signal as it is an indication of cash strength."
In fact, more ominously, the March corn contract ended 0.25 cents above the December one.
Poor sales
But Chicago wheat, which had looked set for a stronger day, after climbing back above its 50-day moving average on a continuous chart, faltered after its own export sales proved disappointing, at 309,000 tonnes.
Furthermore, the United Nations focused investors' eyes on the likelihood of a far bigger harvest of the crop next year, with an upbeat report on winter crop sowings.
And although Commonwealth Bank of Australia is poised to cut its forecast for the Australian wheat crop, investors kept prices on the downward path.
Chicago's December lot finished down 0.5% at $8.69 ¼, while London wheat ended down 0.2% at £199.05 a tonne for November delivery.
Paris wheat for November bucked the trend, closing up 0.9% at E260.25 a tonne.
'Upwards momentum exhausted'
Bears were in charge of the soft commodities, led by coffee as improved weather forecast in Brazil triggered heavy fund long liquidation of New York arabica futures.
Arabica futures for December finished down 3.3% at 175.05 cents a pound, touching a one- week low.
Concerns over dry weather in Brazil had led futures to their best since July on Tuesday. However, higher prices have eked out sales by growers.
Sucden Financial said it didn't "want to get too bearish as it could be a trap and as we know aggressive moves in either direction are achievable.
But it appeared that the "sheer weight of the origin selling will continue and the upwards momentum now must be exhausted".
'Brighter crop outlook'
London cocoa dropped a further 2.0% to £1,532 a tonne, adding to the last session's 2.2% decline amid improving supply estimates from the Ivory Coast.
Commerzbank analysts said that the "the main reason for this pressure is the brighter crop outlook", with the main harvest just beginning in top producer Ivory Coast, and expected to produce more than 1.0m tonnes, not far below last season's result.
"A far more severe downturn was originally expected owing to the lack of rain."
Still, "despite the improved harvest prospects, the global supply deficit should still be greater than the year before", the bank added.
"Consequently, we expect cocoa prices to recover."
Bears lost a little bit of their grip on agricultural commodities,on oilseeds at least, which found the oomph to escape the downdraft which has held them for the last month.
Thursday proved to be a broadly positive day for commodities anyway following positive jobs and factory orders data from the US, and a renewed pledge by the European Central Bank that it stands ready to buy bonds if required.
On the wider spectrum, the CRB commodities index finished 1.3% higher.
On the narrow one signally for Chicago watchers, a low-profile crop seen as a leading indicator, oats, enjoyed a strong day, ending 2.1% higher at $3.70 ¾ a bushel for December delivery.
'Seasonal/historical day…'
Still, it was on soybeans that traders were really focused, to see whether October 4 could again bring a rebound, as it has had an uncanny knack of doing so in the past.
"Today is the seasonal/historical day that soybeans and soybean meal are to be bought," US Commodities said.
So it was, with Chicago's November lot ending up 1.2% at $15.51 ½ a bushel, and not just for reasons of history.
For one, oil prices, a key influence on commodities such as soyoil used in making biodiesel, were underpinned by the clash between Syrian and Turkey forces.
(For that matter, gold touched its highest level in a year just shy of $1,800 ounce amid a continued influx of investment interest.)
'Very strong number'
But there were reasons within the oilseeds complex too, not least a storming week for US exports, with sales coming in at 1.3m tonnes, ahead of forecasts of at best 900,000 tonnes.
"This is a very strong number," Darrell Holaday at Country Futures said,
"With all of the talk about increased yields," or at least of the US harvest proving less bad than feared, "the most important fundamental aspect of the soybean market is the strong demand".
US Commodities said: "The stage is set for larger supplies versus a larger demand, adding that "thus far no signs of rationing are occurring in the soybean exports or crush".
Canola downgrade
And there was unexpected support from north of Chicago, in Canada, where officials estimated the domestic canola crop at 13.4m tonnes - well below expectations of a figure of some 15m tonnes.
Disease and poor weather had taken their toll, Statistics Canada signalled, sending prices of the oilseed itself 1.0% higher in Winnipeg, to Can$606.50 a tonne.
In Paris, rapeseed for November delivery soared 3.6% to E482.50 a tonne for its first positive close of the week.
'Important fundamental signal'
But could the benefit feed through into other crops?
Bears did find the strength to bring corn back from earlier highs to a negative finish, down 0.5 cents at $7.57 a bushel.
The grain had been helped by export sales of 327,000 tonnes which, while nothing to write home about in historical terms (a year ago the figure was 1.3m tonnes) were bumper by recent standards.
Indeed, they were the best for eight weeks, and eased some of the demand doubts fostered by soft ethanol data on Wednesday.
And some movements in spreads had helped too.
"One of the important fundamental signals in the corn and soybeans is the inversion that we have now seen develop between December and March corn contracts and November and January soybean contracts," Mr Holaday said.
"This is always a strong fundamental signal as it is an indication of cash strength."
In fact, more ominously, the March corn contract ended 0.25 cents above the December one.
Poor sales
But Chicago wheat, which had looked set for a stronger day, after climbing back above its 50-day moving average on a continuous chart, faltered after its own export sales proved disappointing, at 309,000 tonnes.
Furthermore, the United Nations focused investors' eyes on the likelihood of a far bigger harvest of the crop next year, with an upbeat report on winter crop sowings.
And although Commonwealth Bank of Australia is poised to cut its forecast for the Australian wheat crop, investors kept prices on the downward path.
Chicago's December lot finished down 0.5% at $8.69 ¼, while London wheat ended down 0.2% at £199.05 a tonne for November delivery.
Paris wheat for November bucked the trend, closing up 0.9% at E260.25 a tonne.
'Upwards momentum exhausted'
Bears were in charge of the soft commodities, led by coffee as improved weather forecast in Brazil triggered heavy fund long liquidation of New York arabica futures.
Arabica futures for December finished down 3.3% at 175.05 cents a pound, touching a one- week low.
Concerns over dry weather in Brazil had led futures to their best since July on Tuesday. However, higher prices have eked out sales by growers.
Sucden Financial said it didn't "want to get too bearish as it could be a trap and as we know aggressive moves in either direction are achievable.
But it appeared that the "sheer weight of the origin selling will continue and the upwards momentum now must be exhausted".
'Brighter crop outlook'
London cocoa dropped a further 2.0% to £1,532 a tonne, adding to the last session's 2.2% decline amid improving supply estimates from the Ivory Coast.
Commerzbank analysts said that the "the main reason for this pressure is the brighter crop outlook", with the main harvest just beginning in top producer Ivory Coast, and expected to produce more than 1.0m tonnes, not far below last season's result.
"A far more severe downturn was originally expected owing to the lack of rain."
Still, "despite the improved harvest prospects, the global supply deficit should still be greater than the year before", the bank added.
"Consequently, we expect cocoa prices to recover."
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