(Agrimoney) – The dollar fell 0.4% against a basket of currencies, while Brent crude rose 1.6% to $62.35 a barrel in late deals.
That might have been expected to work wonders for commodity markets, with a cheaper greenback making dollar-denominated raw materials more affordable, while Brent crude has become something of a barometer for the sector.
It wasn’t quite that simple for commodities overall. The CRB index eased 0.2%.
But for ags, gains were the norm – although with three notable exceptions.
Euro pressure
The first were euro-denominated contracts, which suffered as the currency rose 0.6% against the dollar, with concerns over a failure to reach a new debt deal with Greece dismissed – or worse.
As Kevin Ferriter at Capital Economics said: “Some investors might conclude that the eurozone would be a stronger economic region without Greece.”
Wheat for May closed down 0.4% a E18.00 a tonne in Paris, where rapeseed for May ended flat at E356.75 a tonne.
Modest strength in sterling helped keep London wheat under wraps too, with the May contract easing 0.3% to £125.00 a tonne.
Maize rally falters
Then there was Johannesburg-listed corn, which showed signs of fatigue after its remarkable rally so far in February on fears for drought and heat damage to South Africa’s crop.
Yellow maize, used mainly in feed, fell 1.2% to 2,453 rand a tonne for the best-traded July contract, falling dramatically from an intraday high (and contract high) of 2,564 rand a tonne.
White maize, a food staple in southern Africa, remained in positive territory for July delivery, but in closing up 1.6% at 2,936 rand a tonne ended below its limit-up level of 3,010 rand a tonne reached earlier.
One-year low
Also among the losers was arabica coffee, which tumbled 4.6% to 158.85 cents a pound in New York for May delivery – the contract’s weakest close in a year.
JM Smucker’s announcement last week of soft US coffee sales data has spurred some concerns over demand, while much of Brazil is forecast for rain (a boost to soybean prices).
Meanwhile, technicals played a part too, with the fall below a key psychological level encouraging more selling.
Sunny Verghese last week highlighted the importance chart-wise of the 160 cents-a-pound mark, saying that “in the last one month, you have seen the coffee market try to breach that 160 level and it made, I think, about 20 attempts in the last 30 trading sessions and it didn’t pierce that level”.
Robusta coffee was dragged lower too, ending down 2.2% at $2,020 a tonne in London for May, after hitting a one-month high of 2,077 a tonne earlier – ie putting in something of a negative chart indicator in trading outside the range of the previous session and ending lower.
Bullish on beans
But in Chicago, gains were the order of the day, particularly in soybeans, which for March ended up 1.7% at $10.07 ¾ a bushel, ending back above its 100-day moving average for the first time in a month.
The May lot couldn’t quite manage that, in adding 1.7% to $10.11 ¾ a bushel, ending 1 cent or so below its 100-day moving average.
The market shrugged off industry data showing the US crush at 162.675m bushels last month – some 2,000 bushels below the market forecast, although still the highest ever figure for a January.
Weather played a part in helping soybeans, on two counts.
‘Solid buying’
One was rain forecast for Brazil this week, and “unneeded in southern Brazil ports and key harvest areas”, in terms of hampering both, Richard Feltes at Chicago broker RJ O’Brien said.
The other was US cold, which spurred ideas of livestock demand for feed, and logistical hiccups transporting it.
Indeed, soymeal, which late last year was sent soaring in part by logistical hiccups, jumped 3.0% to $342.30 a short tone for March delivery.
“Most of the strength in the soybean complex is tied to solid buying in the soymeal as cold temperatures grip the US Midwest and Eastern areas,” said Darrell Holaday at Country Futures.
“This is increasing soymeal consumption and pushing spot soymeal values as weather conditions also hamper overall movement of grain.”
US export data for last week of 1.34m tonnes, as measured by cargo inspections, didn’t hurt either, even if standing below the 1.49m tonnes the previous week.
Investors have been braced for a sharp drop in volumes as South American supplies ramp up, although US shipments for 2014-15 have now passed 40m tonnes, hitting 40.29m tonnes, compared with 34.59m tonnes at the same point of last season.
‘Limited progress’
And corn export sales were OK too, at 724,900 tonnes, up from 701,389 tonnes the week before, although a little lower year on year.
That wasn’t the only reason for corn ending 0.6% higher at $3.89 ½ a bushel for March delivery, with the contract seen as having technical appeal, and with concerns over sowings of Brazil’s safrinha corn crop too – thanks to the same rains which are slowing the soybean harvest and so delaying the release of land for second-crop plantings.
“The pace of harvest remains rather slow in some areas of Brazil. It has limited progress of the planting of the second crop of corn,” Benson Quinn Commodities said.
“The planting of the second crop is estimated at 23% complete versus an average of roughly 50% at this point,” although it has to be said that estimates differ.
‘It’s a reach’
Chicago wheat’s rally ran out steam a little bit, despite no sign of a let-up in the Ukraine unrest, with the ceasefire not holding in many areas.
US exports last week were reasonable, at 401,397 tonnes, up from 397,906 tonnes the week before, and well up year on year.
Furthermore, there has been talk of cold causing some winterkill among winter wheat seedlings. But how much?
“There has been some talk of cold temperatures potentially affecting US winter wheat production,” Benson Quinn Commodities said.
However, “it’s a reach, as very little damage is expected in the coldest areas due to snow cover.”
Wheat for March ended up 0.3% at $5.34 ¾ a bushel, well below an early high of $5.48 a bushel.
