(AgriMoney) – Turnaround Tuesday? It was more of a Groundhog Day, in Chicago at least, as grains and soybeans managed another positive session, helped by technical as well as fundamental factors.
Where there was a reversal was in New York, where arabica coffee gave back all of its gains of the last session, and more, hurt by increasing expectations for the 2013 Brazilian harvest, which prompted Macquarie to talk potentially of a second successive year of world production surplus.
Raw sugar saw a little bit of a reversal too, on profit taking, with the March contract easing 0.4% to 19.90 cents a pound, with the rains boosting coffee prospects not so positive for the cane harvest.
That was more in line with the broader market movements, after the French downgrade by Moody’s, and an $8.8bn writedown by Hewlett-Packard to the value of Autonomy, the UK software company it bought for $10bn last year, injected market caution.
Wall Street shares were a touch lower in late deals, and the CRB commodities index dropped 0.6%.
South America fears
But soybeans, especially, managed to outperform that in Chicago, adding 1.3% to $14.12 ¾ a bushel for January delivery, returning above the $14-a-bushel mark.
Revived, if still relatively low key, fears for South American prospects were part of the reason for the rise, with Oil World cutting by 3.0m tonnes its combined estimate for the Argentine and Brazilian crops.
And further rain is forecast for Argentina, adding to ideas of planting delays.
But export dislocations played a part too.
‘Shipping delays’
A strike by anti-government unions at Argentina’s main grains port of Rosario was one aspect, coming at a time when investors are already concerned about South American ports ability to deal with high export volumes.
“We continue to hear of shipping delays out of Brazil,” Paul Georgy at Allendale said.
However, another part of the equation was the prospect of disruptions from low Mississippi water levels to alternative supplies from the US too, the major source of soybean exports for now and a big one for corn too.
Army engineers have indicated that while no closure of the river is expected, restrictions on barge drafts, and so the amount that vessels can carry, may be implemented if rains are not forthcoming.
Low river
“This is causing some panic to get soybeans bought and to the Gulf ahead of those restrictions,” Darrel Holaday at Country Futures said
“Remember, grain companies cannot evoke force majeure because of river closure as they do have another way to get grain to the Gulf,” rail or road, even if these alternatives are expensive and unappealing.
“Therefore, it makes more sense for exporters to push near-term bids and attempt to get them in position.”
Signally, Chicago’s March soybean contract added 1 more modest 1.0% to $13.96 ¼ a bushel.
‘Testing the technical resistance’
The low Mississippi, a link from the Midwest to ports, was one support for corn, although less so given the less impressive US corn export programme.
But South American weather provided extra help, given that corn’s earlier sowing window makes it especially vulnerable to planting delays.
And so did technical support, after the December contract returned above its 20-day moving average, and troubled the 50-day line too, before retreating a little to settle at $7.43 ¼ a bushel, a rise of 0.6%.
“The December corn contract is testing the technical resistance at $7.46. This is the 50-day moving average and a close above that level would prompt additional technical buying above that level,” Mr Holaday said.
Wheat edges higher
Meanwhile, wheat for December added 0.3% to $8.45 a bushel, maintaining its more modest gains in the face of a lack of demand for US exports, but supported by overnight data showing a continued decline in the condition of US winter wheat seedlings.
Nor does the condition look like improving soon, givenexpectations of further dryness in hard red winter wheat areas whose lingering drought is at the centre of crop problems.
