PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:47 GMT, Wednesday, 23rd Jul 2014, by
Evening markets: coffee, cocoa, soy lead strong day for ags

For once, grain futures set contract lows, and then recovered, reversing their usual recent pattern, as the weight of more bullish news at last held.

Grain and oilseed futures did not manage such healthy gains as New York arabica coffee, which soared 4.9% to 176.60 cents a pound in New York for September delivery, closing above their 50-day moving average for the first time in two months, boosted by a downbeat FCStone report on the Brazilian harvest.

Nor was it exactly clear why grains chose Wednesday to end, or at least interrupt, their downward trajectory.

But the results made pretty good reading across the board for crop bulls more used over the last three months to heading home in tatters.

Yield disappointment

Certainly, there was some cause for the rally in the rapeseed complex, with Canada's AAFC farm ministry downgrading its forecast for the domestic crop to 14.45m tonnes, well below the US Department of Agriculture estimate of 15.7m tonnes.

AAFC raised to 4.4%, from 1.2%, its estimate for the amount of Canadian canola sowings not making it to harvest, following flooding in Manitoba and Saskatchewan.

Meanwhile, there are growing reports too that the disappointing start to the UK rapeseed harvest reported by last week may be more than a flash in the pan, reflecting the status in other parts of north west Europe too.

"There are reports of rapeseed yield in western Europe being lower than expected," Jefferies Bache noted, although the EU is still expected see a record harvest.

Harvest-time rains, as Europe has suffered, can encourage sprouting in ripe rapeseed as it does in wheat, with heavy rains or hail also representing a quality threat, in shaking seeds from brittle pods.

Rapeseed for November - which dived as far as E300.50 a tonne in the last session, the lowest for a nearest-but-one contract in more than four years – ended this session at E329.25 a tonne, a rise of 2.2% on the day.

Canola for November closed up 1.1% at Can$438.00 a tonne in Winnipeg.

'Did not indicate significant moisture'

That was one help for soybeans, which ended up 1.8% at $10.76 ½ a bushel in Chicago for November delivery, recovering from a fresh contract low of $10.55 a bushel reached earlier.

But there were other supports too, such as a strong performance by soymeal, which appeared to show something of delayed reaction to the strong US exports unveiled on Tuesday, and ended up 2.5% at $391.50 a short ton for August delivery, closing above its 10-day moving average for the first time this month.

The December contract added 1.6% to $347.30 a short ton.

And then there was a turn less benign in the US Midwest weather.

"An overnight weather model run that was did not indicate significant moisture in the western areas pushed soybeans higher," Darrell Holaday at Country Futures said.

'Highest yield potential'

US soybeans, after all, have yet in earnest to get through their sensitive pod-setting period, making weather more of a threat to the oilseed than to corn, which is well into its vulnerable pollination stage.

(In fact, some corn harvesting has begun down south, eg in Texas.)

And corn was indeed more reluctant to rise, with the Doane crop tour showing what the broker's Bill Nelson termed "possibly the highest yield potential in history of the tour".

There is also comment over weakening US basis, as high crop forecast deter end users from putting in much coverage.

Still, corn for December added 0.7% to $3.70 ¾ a bushel, having earlier set a fresh contract low of $3.65 ¾ a bushel.

Wheat orders

Wheat did better -especially Chicago soft red winter wheat, the speculators' favourite, in which hedge funds have a large net short position.

Chicago's September contract added 1.2% to $5.30 ¾ a bushel, well ahead of the 0.4% rise to $6.20 ¾ a bushel in Kansas City hard red winter wheat for September.

But there are signs of demand, with Iran in the market for Black Sea grain, and Egypt purchasing 235,000 tonnes of wheat.

OK, that was from the Black Sea too, but the absence of French offers, and retreat in Romanian ones, was viewed as sign of the squeeze in quality wheat supplies from the European Union, at least.

In Paris itself, wheat for November ended up 0.8% at E179.50 a tonne, closing back above its 10-day moving average.

Canada downgrade

Furthermore, wheat gained a fillip from AAFC's downgrade in its estimate for the Canadian crop to 27.74m tonnes, down nearly 10m tonnes year on year, and again below the USDA estimate.

Still, whether crops can hang on to gains…

CHS Hedging noted that "reports of better yields for northern hard red winter wheat and soft red winter wheat continue to add downward pressure to the market," although at least the winter wheat harvest is in its final stages.

"Initial reports out of the spring wheat tour in North Dakota are for high crop potential," the broker added.

Cocoa sweetens

Back among soft commodities, cocoa for September soared 1.7% to $3,185 a tonne in New York, after hitting a three-year high for a spot contract of $3,204 a tonne earlier, on heavy volumes.

The London November contract ended up 1.6% at £1,988 a tonne, having hit a contract high of £1,996 a tonne earlier.

The bean continues to gain support from strong Asian and North American grinding data last week, which has supported ideas of a world production shortfall, with a strong Ivory Coast cash market helping too.

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