It looked like agricultural commodity buyers left early for
the long weekend in the US, with even soybeans
suffering this time.
Wheat, as might
have been expected, for a fourth session traded in positive territory early in
the day only to end lower.
Again, weather was blamed largely for the decline, with rains
in the drought-hit southern US Plains, and dryness in the sodden north of the
country, where sowings have been slowed by wet and cold.
'Improvement in grain
"US hard red winter wheat country and west Texas drought
areas have begun to receive significant rain and will continue doing so through
the long US holiday weekend," Commodity Weather Group said.
"Rain will continue to fall daily in the central and
southern Plains through Monday into Tuesday," with more scattered precipitation
later next week.
"All of the precipitation will be a boon to cotton, corn, sorghum and peanut planting," the weather service
said, if being more circumspect over wheat, which may arrive too late for crops
in the likes of Texas and western Oklahoma, "but improvement in grain quality
Benson Quinn Commodities said: "Drought-stressed southern Plains
are expected to receive rains this weekend which will not boost production prospects
but will halt declining conditions."
Meanwhile, in the north, "precipitation looks to hold off in
the spring wheat growing geographies until late in the weekend, which will
allow planting to continue to advance in both the US and Canada," CHS Hedging
It has to be said that not all the weather outlooks are
quite so positive to producers, with the Russian forecast taking a drier turn.
"The drier outlook for northern Central Region and Volga
Valley next week would maintain moisture shortages there," US-based weather
service MDA said.
"But some improvements are still expected in northern North
Caucasus," with rains due in Ukraine and southern Belarus too.
Russia has a history of dryness at this time of year,
cutting yields and sending world wheat prices higher.
Furthermore, Turkey acknowledged a drop in its wheat production prospects, if not as much as US officials have already pencilled in.
Still, it was not enough to prevent July wheat falling 1.0%
to a two-month low of $6.52 ½ a bushel in Chicago, dropping below its 200-day
moving average for the first time in two months as well.
Kansas City hard red winter wheat, the type which has been
under threat from US southern Plains drought, dropped 0.9% to $7.45 a bushel,
falling below its 75-day moving average for the first time in three months.
Minneapolis-traded hard red spring wheat, as being planted
in the northern US, fell 0.8% to $7.31 a bushel.
And in Paris, soft milling wheat for November dropped 1.0%
to E195.25 a tonne, a three-month low on a spot contract basis.
It little helped bulls that weekly crop progress data showed
75% of French soft wheat in "good" or "excellent" condition, down two points
week on week.
London feed wheat for November eased 0.5% to £146.10 a
'Under heavy pressure'
The southern Plains rains were little help to cotton bulls either, in boosting
prospects for the crop in Texas, the top producing state, which is still in its
early stages (indeed half sown) and so able to benefit from the rain.
At Citigroup, Sterling Smith said: "The crash is continuing
today as the approaching rollover," as investors move from front to more distant
contracts, "better weather and the realisation that global stocks are just that
enormous is leading to long fund liquidation.
"New crop December is also under heavy pressure as
beneficial rains are coming into drought plagued areas of Texas.
"This liquidation may well carry on into Tuesday action," Mr
July cotton dropped 1.7% to 87.78 cents a pound in New York,
if recovering from an intraday low of 85.26 cents a pound, the lowest in two
months, which had taken it temporarily below its 200-day moving average.
December cotton fell 1.6% to 79.47 cents a pound, if recovering
from a drop of 2.9% earlier.
Even soybeans succumbed
to selling, as investors took profits at the end of a week which took Chicago's
July lot to a contract high in the last session, when July soymeal setting a contract high too.
It is not as if the stories of tight US supplies, nor
improved Chinese demand, have gone away.
Indeed, the USDA announced the sale of 120,000 tonnes of soybeans
to China, for 2014-15, and a further 210,000 tonnes to an "unknown"
However, there are signs that the higher prices may be
having some effect in rationing demand.
"There is some chatter that processors are contemplating
switching bids from the July to the August board," CHS Hedging said.
Country Futures said: "The move up the last two days did
weaken the soybean basis and push another couple of cargoes to the US out of
Furthermore, back on the supply side, Argentina is to enjoy drier weather, to get the last stage of its delayed soybean harvest back on track and
limit the threat of quality damage.
Soybeans for July dropped 0.4% to $15.15 ½ a bushel, although
soymeal for July added 0.2% to $502.60 a short ton, a fresh closing contract high,
if failing to match the intraday top of $508.00 a short ton reached in the last
modest gains, adding 0.3% to $4.78 a bushel for July delivery, and 0.4% to
$4.75 ¼ a bushel for the December contract, helped by talk that US authorities
are to row back on plans for a steep fall in the ethanol mandate for this year.
The ethanol element is seen as been cut back to 13.6m
gallons, some 600,000 gallons more than initially expected.
There is also some talk of farmers switching unplanted corn acres
to other crops, now that the ideal sowing window is well past.
"Even though good progress is being made, with corn planting
behind in the North and additional rains in the forecast, it is likely that
corn will lose some acres to either preventative plant or soybeans," CHS