Crude oil futures firmed, after touching lows of just of $36 a barrel. January brent crude was trading at $37.95 a barrel as markets closed, up 0.1% on the day.
“This type of turnaround has helped support the overall market psychology,” said Darrell Holaday, of Country Futures.
‘Supermarket of the world’
Argentina’s new president Marucio Macri signalled his commitment to the agricultural sector, by making his first economic announcement the removal of an export tax on wheat and corn, as well as a trim to soybean tariffs.
The tax cut is not news to the market, but Mr Macri also signalled plans to push up the value chain.
The 32% tax on soyoil and soymeal will be trimmed by 5 percentage points.
“You will have to do your bit, which is to export fewer [unrefined] grains,” Mr Macri told farmers.
“We have to go from being the breadbasket of the world to the supermarket of the world,” he said.
Credit uncertainty
The market for Argentine soyoil, and the biodiesel produced from it will also depend on the outcome of legislative wrangling in the US, over a bill that would push the biodiesel tax credit to the producer, effectively removing a subsidy for biofuel imports, will succeed.
“Odds makers still making it a 50/50 call,” said Mr Holaday.
“The blender’s credit for biodiesel could have an economic impact on soyoil,” said Paul Georgy of Allendale.
The large net-long held by managed money in soyoil futures revealed by the CFTC data was also a drag, as it leaves room for a sell-off.
January soyoil fell 0.8% to end the day at 31.12 cents a pound.
Currency control
Still, the future of Argentine commodity exports will hinge on an end to currency control.
Mr Macri has pledge to float the peso, which would allow it to devalue, making sales more tempting for farmers, who are sitting on large stockpiles of grains, particularly soybeans.
The timing and size of the devaluation, which is set to hinge on Argentina’s ability to secure loans from western banks, will be closely watched by markets.
Soybean sales
Meanwhile the US reported soybean sales of 1.344m tonnes in the latest week.
This is down from 1.721m tonnes a week ago, and behind analysts forecast of 1.45-1.65m tonnes.
January soybeans rose 0.5% to finish the day at $8.74 ¼ a bushel. January soymeal rose 0.8% to finish at $275.5 a short tonne.
Strong US exports
Speculators are still holding a near-record large long position in Chicago wheat, leaving plenty of room for a bear run, according the CFTC data.
But US wheat export inspections were reported at 434,767 tonnes, up from 225,034 tonnes last week, and ahead of the pace of last year.
The market is still bracing for news from the US Federal Reserve, which will announce the results of its latest meeting this week.
The US is expected to hike rates by 0.25%, but markets will be primed for surprises, which could drive sharp changes in the dollar.
UK net exporter
UK wheat exports also picked up pace in October, leaving the country a net exporter for the first time this season.
The UK, which produces primarily feed wheat, shipped 195,324 tonnes in October, while imports dropped to 137,425 tonnes.
March Chicago wheat finished the day up1.2% at $4.93 ½ a bushel.
Corn rallies
Export inspections for US corn were reported at 566,835 tonnes, in line with analyst expectations.
And Reuters reported that South American corn available for export is once again cheaper than US product, which is bearish for US prices.
Still, March corn ended the day up 2.1% at $3.81 ¾ a bushel.
Softs losses ease
And the oil recovery helped trim losses in softs as well.
Raw sugar prices touched a five week low, fuelled by CFTC data showing a large net-long in the hands of hedge funds, raising fears that the market has been overbought.
Noting the size of the long position, Nick Penney, senior trader at Sucden Financial, said “those who bought into the fundamental bull story recently may be getting a bit edgy”.
March raw sugar settled down 0.5%, at 14.51 cents a pound, after touching lows of 14.23 cents.
Arabica coffee futures also gained from the stabilising oil price, but still ended up down 1.1%, at 119.9 cents a pound.
Robusta coffee futures ended down 1.6%, at $1,475 a tonne.
March cotton settled down 0.5% at 63.38 cents a pound, after speculators were reported to have lifted their net-long.
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