26th Nov 2012, by Agrimoney
While grains and oilseeds look as if they are beginning to find their feet, coffee's quest for a bottom appears to have remained fruitless, with arabica beans on Monday hitting a fresh two-year low.
New York's little-traded December arabica coffee lot set a contract low of 132.25 cents a pound, a fresh low since June 2010 for spot lot, before recovering ground to close at 139.90 cents a pound, a drop of
The better-traded March contract finished down 1.3% at 148.90 cent a pound, a two-year low for a nearest-but-one contract.
Lynette Tan at Phillip Futures noted "ample supplies, weak import demand from major importing countries and the lack of fresh fundamental news to lift the markets".
Institutional u-turns
In fact, there was some fundamental reason for investors to buy the bean, with the Colombian growers' federation at the weekend cutting to about 8m bags, from 8.5m bags, its forecast for domestic output in 2012.
But many investors had factored in another disappointing Columbian harvest, and are looking forward ahead to a strong 2013 Brazilian crop, expectations of which have been boosted by rains which have promoted flowering.
And Macquarie gave a slap to hopes that the index fund reweighting, one cause of buying pressure for unpopular soft commodities, would prove sufficient to change speculators' thinking on the beans.
With their net short positions at a record high, a change of heart among speculators could spark a real comeback in the bean.
At least there is hope for bulls, such as Brazil's Conselho Nacional do Café, which highlighted that "some of the institutions that have come touting a more pessimistic tone a few weeks ago had the opposite opinion".
Sucden Financial noted that "appetite for a significant extension to the downside does not yet seem to be there as the 148.00-cents-a-pound physiological support held and pushed prices back up".
'Bit of a negative tone'
In Chicago, and the grain and oilseed pits, price gains were the order of the day.
Not huge ones, with corn for December finished up all of 0.2% at $7.47 ¼ a bushel.
But they were notable nonetheless on a day when many assets falling back as, with the US back from Thanksgiving holiday, attention returned to the fiscal cliff and the need for a budget resolution to avoid it.
"The outside markets are offering a little bit of a negative tone, while leaders try to revamp the austerity package for Greece," Benson Quinn Commodities said.
"Washington will be watched closely as our leaders get back to work on solving issues related to the fiscal cliff."
Shares fell 0.6% on Wall Street in late deals, while the CRB commodities index shed 0.4%.
'Gone dry'
But one factor grains and oilseeds had going for them was the renewal of weather concerns over South America, prompting investors to inject a little more risk premium back into values.
"Expect dry conditions in large portions of Brazil to garner some attention going forward," Benson Quinn Commodities said.
"The southern one-third of Brazil has now gone dry," rival broker US Commodities said.
Gail Martell at Martell Crop Projections said that in the southern state of Parana, "while October rains were ample, November has been dry," with a moisture deficit of 210-270mm (8.3-10.6 inches) in the last three months overall.
"What makes drought even more ominous is low subsoil moisture from a dry winter season."
'Soggy conditions have resumed'
Meanwhile, Argentina has been hit by "fresh heavy rainfall from a wave a strong thunderstorms".
"Soggy field conditions have resumed," slowing field work, again, after a period of recovery in corn and, especially, soybean plantings.
And that is not the end of the rains, weather service WxRisk.com said, forecast the arrival of a "strong piece of energy by the end of the week" which will bring "significant showers and thunderstorms to 70% of central eastern and northern Argentina as well as Paraguay with rainfall amounts between 1-2 inches (25-50mm)".
At broker Allendale, Paul Georgy said: "Argentina has more rain in the forecast with already less than desirable planting conditions."
'Very large US sales'
As an extra reason to buy soybeans, the US Department of Agriculture unveiled yet another export sale of US soyoil, of 20,000 tonnes to "unknown" destination.
"There is also still a lot talk about the large US soyoil sales that were made last week," Darrell Holaday at Country Futures said.
"Those are very large and will certainly post a bid under this market in the near term."
As an extra support to soyoil itself, one of the two main products, with soymeal, produced from crushing soybeans, rival palm oil enjoyed a strong performance in Kuala Lumpur, rising 1.5% to 2,432 ringgit a tonne.
Soyoil for December closed up 0.5% at 49.27 cents a pound, while soybeans for January also added 0.5%, to $14.18 ¾ a bushel, despite data showing a retreat in US exports, as measured by cargo inspections, to 45.5m bushels last week, from 66.9m bushels the week before.
'Now competitive'
Wheat did less well, in part feeling some pressure from its own drop in export sales, which dropped to a meagre 7.8m bushels from 11.4m bushels the week before.
This put a dampener on improved ideas of US competitiveness in the world wheat market, with US Commodities noted that "wheat support continues from rising European values and shrinking Black Sea supplies.
"US wheat exports are now competitive with European Union ones."
Still, signs of strong world demand offered some support, with Iraq tendering for 50,000 tonnes of wheat, and Algeria in the market too, on top of Jordan's quest for 100,000 tonnes announced earlier.
'Only silver lining'
Furthermore, wheat is engulfed by its own production hiccups too, with the UK's sowing setbacks for winter crop being highlighted by Origin Enterprises, while the EU's Mars unit cautioned over France and Russia too, while being upbeat over prospects for many European Union countries.
In the US, where dry weather continues to threaten hard red winter wheat seedlings, the GFS weather model "indicates virtually no opportunity for rainfall in 90% of the hard red winter wheat area over the next 15 days", Mr Holaday said.
"The winter wheat condition will continue to deteriorate.
"The only silver lining is that most report that the wheat has not gone into dormancy, so rainfall would be helpful. But that rainfall is not on the horizon."
Wheat comparisons
Chicago wheat for December closed up 0.2% at $8.49 a bushel.
London wheat did better, helped by ideas of the poor planting conditions, as well as the starting of the Vivergo wheat ethanol plant, bringing extra demand onstream.
London's January lot added 1.1% to £220.00 a tonne.
Paris wheat for January lagged, closing unchanged at E269.75 a tonne, pausing after a period of outperformance.
"Reduced supplies from the Black Sea region have kept the price of Paris wheat elevated," Ole Hansen, head of commodity strategy at Saxo Bank, said.
"Since August the price of Paris compared with Chicago has moved from an $0.80-a-bushel discount to an $0.80-cents-bushel premium."
While grains and oilseeds look as if they are beginning to find their feet, coffee's quest for a bottom appears to have remained fruitless, with arabica beans on Monday hitting a fresh two-year low.
New York's little-traded December arabica coffee lot set a contract low of 132.25 cents a pound, a fresh low since June 2010 for spot lot, before recovering ground to close at 139.90 cents a pound, a drop of
The better-traded March contract finished down 1.3% at 148.90 cent a pound, a two-year low for a nearest-but-one contract.
Lynette Tan at Phillip Futures noted "ample supplies, weak import demand from major importing countries and the lack of fresh fundamental news to lift the markets".
Institutional u-turns
In fact, there was some fundamental reason for investors to buy the bean, with the Colombian growers' federation at the weekend cutting to about 8m bags, from 8.5m bags, its forecast for domestic output in 2012.
But many investors had factored in another disappointing Columbian harvest, and are looking forward ahead to a strong 2013 Brazilian crop, expectations of which have been boosted by rains which have promoted flowering.
And Macquarie gave a slap to hopes that the index fund reweighting, one cause of buying pressure for unpopular soft commodities, would prove sufficient to change speculators' thinking on the beans.
With their net short positions at a record high, a change of heart among speculators could spark a real comeback in the bean.
At least there is hope for bulls, such as Brazil's Conselho Nacional do Café, which highlighted that "some of the institutions that have come touting a more pessimistic tone a few weeks ago had the opposite opinion".
Sucden Financial noted that "appetite for a significant extension to the downside does not yet seem to be there as the 148.00-cents-a-pound physiological support held and pushed prices back up".
'Bit of a negative tone'
In Chicago, and the grain and oilseed pits, price gains were the order of the day.
Not huge ones, with corn for December finished up all of 0.2% at $7.47 ¼ a bushel.
But they were notable nonetheless on a day when many assets falling back as, with the US back from Thanksgiving holiday, attention returned to the fiscal cliff and the need for a budget resolution to avoid it.
"The outside markets are offering a little bit of a negative tone, while leaders try to revamp the austerity package for Greece," Benson Quinn Commodities said.
"Washington will be watched closely as our leaders get back to work on solving issues related to the fiscal cliff."
Shares fell 0.6% on Wall Street in late deals, while the CRB commodities index shed 0.4%.
'Gone dry'
But one factor grains and oilseeds had going for them was the renewal of weather concerns over South America, prompting investors to inject a little more risk premium back into values.
"Expect dry conditions in large portions of Brazil to garner some attention going forward," Benson Quinn Commodities said.
"The southern one-third of Brazil has now gone dry," rival broker US Commodities said.
Gail Martell at Martell Crop Projections said that in the southern state of Parana, "while October rains were ample, November has been dry," with a moisture deficit of 210-270mm (8.3-10.6 inches) in the last three months overall.
"What makes drought even more ominous is low subsoil moisture from a dry winter season."
'Soggy conditions have resumed'
Meanwhile, Argentina has been hit by "fresh heavy rainfall from a wave a strong thunderstorms".
"Soggy field conditions have resumed," slowing field work, again, after a period of recovery in corn and, especially, soybean plantings.
And that is not the end of the rains, weather service WxRisk.com said, forecast the arrival of a "strong piece of energy by the end of the week" which will bring "significant showers and thunderstorms to 70% of central eastern and northern Argentina as well as Paraguay with rainfall amounts between 1-2 inches (25-50mm)".
At broker Allendale, Paul Georgy said: "Argentina has more rain in the forecast with already less than desirable planting conditions."
'Very large US sales'
As an extra reason to buy soybeans, the US Department of Agriculture unveiled yet another export sale of US soyoil, of 20,000 tonnes to "unknown" destination.
"There is also still a lot talk about the large US soyoil sales that were made last week," Darrell Holaday at Country Futures said.
"Those are very large and will certainly post a bid under this market in the near term."
As an extra support to soyoil itself, one of the two main products, with soymeal, produced from crushing soybeans, rival palm oil enjoyed a strong performance in Kuala Lumpur, rising 1.5% to 2,432 ringgit a tonne.
Soyoil for December closed up 0.5% at 49.27 cents a pound, while soybeans for January also added 0.5%, to $14.18 ¾ a bushel, despite data showing a retreat in US exports, as measured by cargo inspections, to 45.5m bushels last week, from 66.9m bushels the week before.
'Now competitive'
Wheat did less well, in part feeling some pressure from its own drop in export sales, which dropped to a meagre 7.8m bushels from 11.4m bushels the week before.
This put a dampener on improved ideas of US competitiveness in the world wheat market, with US Commodities noted that "wheat support continues from rising European values and shrinking Black Sea supplies.
"US wheat exports are now competitive with European Union ones."
Still, signs of strong world demand offered some support, with Iraq tendering for 50,000 tonnes of wheat, and Algeria in the market too, on top of Jordan's quest for 100,000 tonnes announced earlier.
'Only silver lining'
Furthermore, wheat is engulfed by its own production hiccups too, with the UK's sowing setbacks for winter crop being highlighted by Origin Enterprises, while the EU's Mars unit cautioned over France and Russia too, while being upbeat over prospects for many European Union countries.
In the US, where dry weather continues to threaten hard red winter wheat seedlings, the GFS weather model "indicates virtually no opportunity for rainfall in 90% of the hard red winter wheat area over the next 15 days", Mr Holaday said.
"The winter wheat condition will continue to deteriorate.
"The only silver lining is that most report that the wheat has not gone into dormancy, so rainfall would be helpful. But that rainfall is not on the horizon."
Wheat comparisons
Chicago wheat for December closed up 0.2% at $8.49 a bushel.
London wheat did better, helped by ideas of the poor planting conditions, as well as the starting of the Vivergo wheat ethanol plant, bringing extra demand onstream.
London's January lot added 1.1% to £220.00 a tonne.
Paris wheat for January lagged, closing unchanged at E269.75 a tonne, pausing after a period of outperformance.
"Reduced supplies from the Black Sea region have kept the price of Paris wheat elevated," Ole Hansen, head of commodity strategy at Saxo Bank, said.
"Since August the price of Paris compared with Chicago has moved from an $0.80-a-bushel discount to an $0.80-cents-bushel premium."
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