The reversal theme that Agrimoney.com identified for late trading in the last session extended into this one.
There were even signs of it in the rouble, which regained 2% against the dollar, bouncing around the 60-roubles-to-$1 mark.
And Brent crude managed gets its nose out of the dog house too, edging 0.1% higher to $59.32 a barrel as of 08:45 UK time, (02:45 Chicago time).
Of course, Fridays are often a time when trends do reverse, as the prospect of the weekend, and two days without trading, tempts investors to bank gains.
“I expect to see some profit-taking ahead of the weekend,” Brian Henry at Benson Quinn Commodities said, thinking in particular of wheat.
And so it proved, with Chicago wheat for March down 2.4% at $6.39 ѕ a bushel, albeit still nearly $0.50 a bushel more expensive than it was seven trading days ago.
They say that a bull market needs feeding, and there was no fresh news on the Russian import squeeze that has kept investors on edge.
Instead, attention has turned to where the demand for wheat diverted from Russia will go.
“The loss of Russian exports, and we may only be talking 2m-3m tonnes, will be picked up by other exporters,” UK grain merchant Gleadall said.
“However, with the recent rise in US prices, driven by fund shorts, it will not be going to the US.”
One US broker said: “Since the US is far from being competitive on the world wheat market, we don’t see how this rally will be able to extend much longer.”
Terry Reilly, at Chicago-based Futures International, noted a drop in the premium of German wheat over Paris futures, to some E6 a tonne.
“Traders are trying to keep German wheat competitive against other exports in order to capture the Russian business that maybe lost,” he estimated, estimating lost Russian volumes at “2m-4m tonnes through first quarter 2015”.
Mr Reilly added: “Ukraine is also set to capitalise on the Russian export ban but they may have only less than 3m tonnes of exportable wheat supplies left.
“This leaves Argentina and Australia to help fill the gap.”
Argentina looks to have better export prospects, after the government late on Thursday lifted by 1.2m tonnes, to 13.2m tonnes its estimate for this year’s harvest.
Meanwhile, “Australian farmers were said to be active sellers on this week’s wheat rally”, CHS Hedging said.
‘Ready to roll over’
There has been talk in Canada and the US too of elevated levels of selling by producers, of spring wheat in particular.
Certainly, Minneapolis spring wheat has been a bit of a laggard, with its premium over Chicago soft red winter wheat tumbling from $0.40 a bushel at the end of November to less than $0.06 a bushel last night, March basis.
Minneapolis spring wheat for March stood 1.6% down at $6.50 ѕ a bushel on Friday.
Still, the real decider on wheat may be the stance of speculators, and whether they have appetite at last for fresh short positions.
Mr Henry said that “at times, the market feels like it is ready to roll over.
“However, it doesn’t feel like the speculative seller trusts the wheat market or what the next move in Russia could be.”
‘Anything can happen’
With wheat lower, a major prop to corn went too, allowing Chicago’s March contract to ease 0.7% to $4.08 ј a bushel.
Not, it has to be said, that there isn’t positive noise around, much related to China’s decision to permit Syngenta’s MIR 162 genetically modified corn variety, which had been at the centre of a dispute which effectively barred entry to China for US exports of the grain, and of distillers’ grains, the corn-derived feed ingredient.
“There continues to be talk of additional Chinese interest in US DDGs,” Mr Henry said.
There has also been some speculation whether corn can gain the technical support to close a gap in its chart, from $4.23 ј a bushel to $4.26 a bushel, dating from July.
CHS Hedging noted the March contract could at least “be ready to test its 200-day moving average of $4.22 before the end of the year.
“Next week is a shortened week with the Christmas holiday, and anything can happen.”
Soybeans, meanwhile, edged a more modest 0.3% lower to $10.31 ѕ a bushel, continuing to defy bearish talk of prices of $9 a bushel, or below, forced by a record US harvest, and the prospect of a huge South American one too.
In fact, in Argentina, southern growing regions “will see net drying over the next week”, Futures International’s Terry Reilly said.
“Precipitation over the past seven days was already below normal.”
And the US Department of Agriculture longer-term US crop forecasts, unveiled Thursday, continued to attract some comment, in particular the estimate of soybean sowings of 84.0m acres next year.
While higher than the USDA had pencilled in in February, when publishing its previous long-term estimates, the forecast was below market expectations of a figure of about 88m acres.
Informa Economics is expected later today to reveal its own updated acreage forecasts.
(Source – http://www.agrimoney.com/marketreport/am-markets-grains-drop-as-profit-taking-on-wheat-sets-in–2935.html)