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Evening markets: coffee soars, wheat revives, but corn sags

The rain concerns, which dried up in the last session, returned somewhat this time, to help wheat futures recover from four-month lows.

Wheat futures for September, while in Chicago touching $5.77 a bushel at one point, the lowest since early February, ended at $5.84 a bushel, a gain of 0.6%.

Kansas City hard red winter wheat for September did better, soaring 1.3% to $7.12 a bushel, achieving the technical fillip in the process of trading outside the range of the last session and ending higher, a so-called "key reversal".

The headway followed the renewal of concerns over wheat quality, thanks to harvest-time rains, which tipped the balance, for now, against harvest pressure on prices.

'Additional quality declines'

"The heavy rain in Kansas has prompted some wheat buying today in the hard red winter wheat market as the rains were heavy enough to result in a significant harvest delay over a large area," Darrell Holaday at Country Futures said.

MDA said that rains in the southern Plains are "slowing winter wheat harvesting and reducing quality a bit".

North eastern parts of this area face "some additional quality declines" from further rains this week.

There is talk of heavy rains in northern, spring wheat areas too.

'Shortened growing season'

But how heavy?

"Rains are targeted for North Dakota, South Dakota and Minnesota, Saturday and Sunday in amounts that, if realised, will be devastating to the river systems and will be last straw on any hopes of replant," Benson Quinn Commodities said.

And further north, in Canada, "Saskatchewan has been hit with very heavy rain receiving more than twice the average rainfall in the past month," Gail Martell at Martell Crop Projections said, adding that "extremely wet conditions have developed" in parts of Alberta and Manitoba too.

"Producers are beginning to worry about a shortened growing season." With underhelming heat and sunshine so far to spur development, "crops may be more susceptible to a damaging freeze in the fall".

Still, MDA said that extra rains in the northern Plains later this week "should further improve moisture and maintain favourable conditions for spring wheat growth".

More on Canada will be known on data tomorrow. But, for now, Minneapolis spring wheat for July edged 0.4% lower to $6.73 a bushel, its lowest finish in three months/

'Careful for what we ask'

 For corn, however, renewed talk of excess rainfall resurfaced too.

"Currently, too much moisture is the wildcard, with many areas throughout the Midwest in need of a break from rain," CHS Hedging said.

"We'll be careful for what we ask."

And as an extra support, the US Department of Agriculture unveiled the sale of 217,000 tonnes of new crop corn to "unknown destinations".

Demand setbacks

But the demand story was largely less positive, with US ethanol production tumbling 34,000 barrels a day last week from the previous week's record high to hit 938,000 barrels a day.

Even with this lower production, US ethanol stocks were up 333,000 barrels at 18.18m barrels.

And there has been a marked revival in concerns over distillers' grains (DDGs), a byproduct of ethanol manufacture, and the marked reduction in prices since China suspended imports of the animal feed ingredient.

"Prices have moved below the January low. The DDG market is $100 per tonne lower than the early April high," Darrell Holaday at Country Futures said.

Allendale's Paul Georgy said that "US DDG prices continue to slide to the lowest level since July amid China stopping imports and ramped up ethanol production due to a positive grind".

Corn for July 0.5% to $4.41 a bushel, and for December by 0.2% to $4.40 a bushel, if remaining above the level of $4.35 a bushel viewed as a key technical pointer.

'Declining stockpiles'

By rights, poor DDG prices are a negative for the soy complex too, with the product a competitor to soymeal as a high protein feed ingredient.

"DDG prices continue to be under pressure and with feeder cattle/live cattle at their current spread, cheaper DDGs should be able to move to into feed rations more readily than the more expensive soymeal," Sterling Smith at Citigroup said.

Still, for now, soymeal defied the pressure, adding 0.7% to $451.70 a short ton for July delivery.

And that helped soybeans themselves gain too, adding 0.2% to $14.15 a bushel for July delivery.

US Commodities also flagged "concerns that excessive rains in the US Midwest will reduce planted area, at a time of declining stockpiles and advancing prices of palm oil", which temporarily regained 2,500 ringgit a tonne earlier, settling up only 1 ringgit at 2,483 ringgit a tonne.

New crop November soybeans added 0.4% to $12.29 a bushel.

'Diminished crops'

Among soft commodities, raw sugar pared losses to close down 0.4% at 18.61 cents a pound in New York, for October delivery, after a report from cane industry group Unica showed a pick-up in production, but raised doubts over its sustainability.

Unica highlighted dry weather in Brazil's Centre South, a factor which helped coffee, grown in the nearby coffee belt too, and with fresh talk of poor results from the early harvest.

"Harvest is moving along in Brazil, however reports from on the ground continue to point towards diminished crops for both this year and next year's crops," Citigroup's Sterling Smith said.

"A close above the 180.00-cents-a-pound level today and on weekly basis would improve the chart picture noticeably."

Arabica coffee did that in spades, soaring 3.3% to 182.05 cents a pound for October delivery.

Cotton drops

Cotton, however, fared less well, in the new crop December lot this time, falling on the worse-than-expected US economic data, showing an annualised 2.9% contraction in the first quarter of 2014.

Cotton, as an industrial commodity, is more attuned to broader economic factors than other ags.

With US crop condition improving too, cotton for December ended down 1.6% at 75.26 cents a pound.

Palm oil futures regain 2,500 ringgit. Soy, wheat gain too
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