slumped again, to a fresh eight-month low, this time taking corn with them, as a stronger dollar
added to pressure from an exodus of investors to equities, and hopes of a sharp
rebuild in crop supplies.
Chicago wheat for March closed at $6.76 ¼ a bushel, down 2.9%
on the day.
The better-traded May lot ended down 3.2% at $6.83 ¾ a bushel.
The sell-off extended a four-month losing streak which has
already cost the grain more than one-quarter of its value, compared with its
'Never good for grain
While corn futures have stood relatively firm over these
months, protected by the thinness of US supplies, their fall was on a part with
wheat's this time, with Chicago's March contract finishing down 3.3% at $7.08 a
bushel, and May corn 2.9% lower at $6.88 ½ a bushel.
"There are a whole lot of things affecting the market," Mike
Mawdsley at Market 1 said, pointing to factors including the rains refreshing
drought-hit areas of the US, so improving crop prospects, and the talk of investors
switching from commodities to equities,
which extended gains.
Wall Street's Dow Jones Industrial Average share index hit a
fresh record high of 14,320.
Ideas of investors turning their back on commodities gained support
from data showing that February witnessed the greatest outflow of cash from
gold exchange traded funds (ETFs) on record, taking the total this year to the
equivalent of 140 tonnes.
Commodities overall, as measured by the CRB index, lost 0.6%.
"The dollar is
higher – that is never good for grain prices," Mr Mawdsley said, making them
less affordable for buyers in other currencies.
He also cited the prospect on Friday of a US Department of
Agriculture Wasde crop report – a highpoint of the commodities calendar, whose imminence
often prompts profit-taking.
This time the bull spreads in corn futures – the rising
premium of the spot March contract over more distant lots – was seen as the
primary target in the firing line, closing by some 20% as of late deals.
This spread had proved a winner, boosted by ideas of a
reluctance by farmers to deliver corn against Chicago futures (or indeed,
anywhere), catching holders of short positions in the expiring March lot in a
'Dead in the water'
And then there are the hopes for better crops this year,
both in the US and abroad.
In the US, "the only likely setback at the moment is that the
South East is too wet, which could delay spring planting", Mr Mawdsley told Agrimoney.com.
"Other than that, we are dead in the water."
At US Commodities, the broker's president, Don Roose, said
that improved weather was the "dominant feature", with rains [outside the South
East] welcomed by farmers as replenishing soil moisture just in time.
At Martell Crop Projections, Gail Martell said: "Stormy
winter weather has led to a moisture surplus in the central US, easing concerns
over drought in winter wheat."
Oklahoma, where drought-pressed winter wheat seedlings are
staging a rapid recovery, "received 4.3 inches of winter precipitation, 34%
Consultancy Lanworth raised by 116m bushels to 2.026bn
bushels its forecast for the US wheat harvest this year.
'Production at full
And hopes for crops are increased abroad too, even if old
crop stocks remain tight.
Mr Roose noted a "lot of competition in the world.
"We have had high enough grain prices for long enough that a
lot of producers in other countries have raised production to cash in on high values.
"Production is at full throttle, which could leave use with
corn and wheat stocks turning out burdensome".
Besides ideas of India hiking wheat exports, to erode stocks
which have hit four times the government target, there are ideas that Ukraine
might reopen to shipments, following a good start for its 2013 crops.
Lower wheat prices were reflected globally too, with London
wheat for May closing down 2.0% at £200.00 a tonne, and its Paris peer down
1.6% at E232.50 a tonne.
Corn's worse performance over wheat was a reflection in part
of US ethanol data deemed disappointing, with production falling 7,000 barrels
per day last week to 805,000 barrels per day, after four weeks of rising
Production at that level remains below that needed to meet
US Department of Agriculture forecasts for 2013-14.
Furthermore, ethanol appears to be being made increasingly
out of wheat rather than ethanol, with Poet, which was on Tuesday said to be
bidding for wheat for its Ohio facilities, on Wednesday revealed to be seeking the
grain at an Indiana plant.
Brazil vs US
Soybeans at least
managed less severe losses, ending down 0.8% at $14.84 ½ a bushel in Chicago for
March delivery, and by just 0.5 cents at $14.66 a bushel for the May contract.
"Soybeans are softer after yesterday's rally, triggered
additional producer selling, with news stories floating softer pork prices had
Chinese soybean and soymeal markets weaker as well," Benson Quinn Commodities
Furthermore, USDA staff in Brasilia laid out the prospect of
a tough battle between Brazilian and US soybeans in export markets come September.
American supplies then usually take over the reins in export
markets, but Brazil looks like having a stack of export sales to complete,
following a weak start to shipments, blamed on port bottlenecks.
'Remaining sugar spoken
Against that backdrop, the declines in soft commodities
looked pretty pedestrian, even a 0.8% decline to $2,042 a tonne in May cocoa in New York, after hitting $2,038
a tonne earlier – the lowest level for a nearest-but-one contract since June
The bean is being sunk by ideas that West African crops, the
world's most important, will not be as weak as investors had initially expected.
Already, ideas of the world deficit in 2012-13 have fallen
to some 50,000 tonnes, from levels of 100,000 tonnes or more common late last
New York raw sugar
for May fell, but by the slimmest margin of 0.01 cents, to 18.19 cents a pound,
while London white sugar added 0.3%
to $518.20 a tonne.
Indeed, "continuing strength in the white sugar flat price
and front spread - suggesting either nearby demand for refined sugar, or a lack
of availability of the product - is dissuading the long term bears to add to
short positions" in the sweetener, Nick Penney at Sucden Financial said.
"In the background, continued talk of ethanol potentially
being the focus for production in the early stages of the Brazil Centre South
new harvest," besides the country's logistical problems and "the perception
that the remaining sugar from last season is spoken for, has contributed to the
support in flat price".