Wheat prices held near one-year highs, boosted by concerns
over Ukraine and the drought-hit US crop, as corn futures staged a late rally,
spurred by less benign weather forecasts and strong export data.
Soft red winter wheat futures for July stood at $7.34 a
bushel in Chicago with 20 minutes of trading left to go, up 2.5% and heading
for what would be the highest finish for a nearest-but-one contract since
February last year.
The performance by the world benchmark wheat was strong
enough to enable the contract to regain a little of its discount against Kansas
City hard red winter wheat for July, which was up 1.7% at $8.36 a bushel.
Hard red winter wheat is the variety at the centre of concerns
over drought damage which only worsened over the weekend, as temperatures
soared in its southern Plains heartland.
to record levels'
"Weather conditions in the southern Plains turned hot with
temperatures reaching over 90 degrees Fahrenheit in many locations, and reports
of temperatures over 100 degrees in south central Kansas," Citigroup's Sterling
"The crop came into this heat already stressed from cold
weather and stressed from an ongoing drought."
Benson Quinn Commodities said: "Temperatures soared to
record levels - high 90s to over 100 Fahrenheit across Kansas on Sunday - over the
drought stressed hard red winter wheat."
The poor condition of the US crop was confirmed in a crop
tour of Kansas, the top US producing state, last week, and is expected to be
underlined by weekly US Department of Agriculture crop progress data due later
"Look for winter wheat conditions to decline in the west," Benson
Quinn Commodities said.
'Increasing stress and
And the prospect of further deterioration rose as weather
models reduced what little rain there was in the forecast for the southern Plains
for this week.
MDA trimmed its outlook for rainfall amounts to at best 1.5
inches, and coverage to 20%.
"Dryness will continue across south western areas," the
weather service said, adding that "current heat is increasing stress and losses
on the wheat".
As an extra boost to prices, the tensions in Ukraine, where
US officials highlighted reduced potential for this year's grains harvests, showed
no signs of easing off.
The spread of violence to Odessa, home to a major grains
exporting port, has only added to investor jitters.
That was a boost to corn
too, with Ukraine a major exporter of the grain.
Indeed, it is a bigger shipper of corn than of wheat,
although the Black Sea region as a whole is strategically key to world wheat
And as an extra boost, the US unveiled strong corn exports
last week, of 1.24m tonnes, above the 1.16m tonnes the week before, and at the
top end of market expectations.
Furthermore, conditions for US corn plantings turned a
little less helpful, with a wetter outlook for later in the week, potentially
"Rain is back in the forecast for second half of this week
which could stall plantings," CHS Hedging said.
MDA said that "planting will progress well early this week,
but will stall later this week as rains return to much of the region".
Still, there is also a healthy debate as to how much sowings
have already been completed, after what was a pretty open weekend for Midwest
"Planting progress started late last week and is in full
gear throughout the major producing areas," Darrell Holaday at Country Futures said.
According to Doane, "corn planting progress expected to increase
to 35-40% as of May 4, versus a 10-year average of 47%".
CHS said that "planting progress report this afternoon is
expected to show 27-29% planted versus 19% last week and a five-year average of
Benson Quinn Commodities said that "the market is looking
for corn planting as of Sunday at 24-27% complete compared to 12% last year and
near 45% average".
According to Reuters, corn sowing is actually expected by
analysts to be 33% finished.
Whatever, with the markets looking to the future, the strong
progress from 19% finished a week before could not stop corn for July soaring
1.8% to $5.08 ¼ a bushel.
could not maintain early resilience, undermined in part by a steep drop-off in
US exports, at 99,500 tonnes last week, down from more than 250,000 tonnes the
Furthermore, elsewhere in the oilseeds complex, Statistics Canada
estimated Canadian canola
inventories as of the end of March at a record 9.02m tonnes, a touch above
market estimates, and double those a year before.
Canola for July eased 0.5% to Can$477.80 a tonne in late
deals in Winnipeg, while close-relation rapeseed
edged 0.3% lower to E258.50 a tonne in Paris, for November delivery.
Soybeans also faced pressure from an upgrade by Informa
Economics to 87.4m tonnes, from 86.75m tonnes, in its forecast for Brazilian
production of the oilseed, besides from disappointing economic data in China, the
Chicago soybeans for July were 0.4% lower at $14.65 a
'Torrential rains and
Among soft commodities, movement was somewhat dampened by
the close of London markets for a UK holiday.
managed to extend its gains, standing 0.5% higher at 94.74 cents a pound in New
York for July delivery, after the China Cotton Association cut its forecast for
Chinese sowings, and with concerns over US growing conditions too.
"Hot weather in Texas," the top US producing state, "is
continuing to provide support to the market," said Citigroup's Sterling Smith.
Broker Doane flagged "torrential rains and planting delays
across the southern US contrasted by ongoing drought in Texas" as supportive for
"Tight old-crop stocks are supportive to nearby cotton
futures," Doane added.
for July added 1.0% to 205.25 cents a pound in New York, with weather forecasts
remaining a little concerning.
While Somar forecast cooler temperatures over many coffee-growing
areas, rains will be restricted to southern area, and the South East will see "higher
Although there is little hope of much a recovery in this
year's Brazilian coffee crop, hurt by early-2014 drought, there is still much
to play for in terms of 2015 production.