Morning markets: corn steadies, as wheat hits two-year top

Just how severe might the softness which this week set into cornfutures prove?

"There are some technical traders that are expecting the late January to mid-to-late February time frame to be somewhat negative," said Jon Michalscheck at Benson Quinn Commodities.

"Demand usually slows", besides the prospect of southern hemisphere crops soon to come on line.

"The balance of the week will be critical to see if the market can continue to hold above some of its key moving average points as [funds] dress up their positions for the end of the month."

'Tight margins'

As of Wednesday, corn prices were indeed holding their own in Chicago, adding 0.1% to $6.44 ½ a bushel for March as of 08:00 GMT, and ensuring that, having fallen below the nine-day moving average in the last session, the lot remained well above the 20-day line.

The performance was helped by a better day for crude, a key price signal for a crop such as corn used largely in making biofuels, especially when high farm commodity prices have put pressure on the profitability of such operations.

"Ethanol margins are tight," Darrell Holaday at Country Futures said.

Oil edged 0.4% higher to $86.50 a barrel, helped by expectations that a statement from the Federal Reserve due later, announcing its latest US interest rate decision, will prove relatively upbeat on domestic economic prospects.

Stockpile expectations

Furthermore, workers at the Argentine port of Rosario, a key grains facility, are to start an indefinite strike today, a support to crop prices in other exporting countries.

As if wheat, of which Argentina is beginning to export its 2010-11 crop in earnest, needed any extra help to send prices higher, with demonstrations in Egypt only increasing expectations that big importers of the grain will choose stockpiling over any risk of adding soaring food prices to protesters' list of complaints.

"Demand for US wheat has increased after high food costs contributed to riots in Tunisia, Jordan," Ker Chung Yang at Philip Futures in Singapore said.

Traders believe that results of a tender by Iraq may be revealed even today.

March wheat stood 0.7% higher at $8.43 ¾ a bushel, having touched a two-year high of $8.48 ¼ a bushel earlier.

Technical factors

Soybeans continued to lag, depressed by the rain in Argentina of which more is expected this week, to improve further prospects for crops in the third-ranked exporter of the oilseed.

Technically, soybeans are struggling a little too. Chicago's March contract in the last session fell below nine-day and 20-day moving average lines.

"The 50-day is the next possibility," Mike Mawdsely at Market 1 said, implying a drop in the lot below $13.29 a bushel.

Still, "one must remember that November soybeans are just coming off contract highs made on Monday", he added.

And, indeed, the November, new crop lot proved, still, a marginally better performer, adding 1.25 cents to $13.14 a bushel, while the benchmark March contract shed 0.25 cents to $13.74 ¼ a bushel.

Different China fears

More substantial selling pressure was evident in Tokyo's rubbermarket, where the benchmark July contract slumped by more than 5% at one stage before closing at 457.20 yen a kilogramme, down 4.1% on the day.

The problem is in part the prospect of the Chinese lunar new year celebrations, which were blamed by commodity investors on Tuesday for providing a likely point for a Chinese interest rate rise, and today for meaning a break in orders for raw materials, such as rubber, of which the country is a huge consumer.

Mr Ker also clocked concerns that "China may curb the growth of number of vehicles on the road".

He added: "This is likely to weigh on the rubber prices."

(Source: http://www.agrimoney.com/marketreport/morning-markets-corn-steadies-as-wheat-hits-two-year-top---938.html)