Evening markets: corn drops from high. But wheat holds firm

Sessions ahead of weekends often see a bout of profit-taking, there being two days when investors are unable to trade.

And that seemed something of a theme this Friday, with the renewed predominance of funds in agricultural commodity markets, and the prospect of a key US Department of Agriculture Wasde crop report ahead, seen as key influences.

"We would not be surprised to see some profit-taking as the day winds down ahead of the weekend and with the USDA report out Monday," Benson Quinn Commodities said.

That looked the case for New York raw sugar and Chicago corn especially.

'Weather has improved'

Raw sugar for May closed down 1.7% at 18.01 cents a pound, amid ideas that rains could bring something of a recovery to cane crops in Brazil's Centre South region which have been tested by drought.

"Weather has improved in sugar areas as some showers could continue into the weekend," Jack Scoville at Price Futures Group said.

"Rains now could help the crop recoup some of the losses if there is enough rain."

At Sucden Financial, senior trader Nick Penney said that "the market is still concerned with weather in Centre South Brazil and reports of expected heavy rain by Somar weather services in some areas of Sao Paulo and Minas Gerais states - up to 100 mm in some areas - going into the weekend".

Big range of estimates

Arabica coffee, also affected by Brazil's drought, did better, closing up 0.7% at 196.85 cents a pound for May delivery.

But coffee trees look more susceptible than cane to irreversible damage from drought.

Indeed, analysts believe Brazilian production, which had been pegged closed to 60m bags a couple of months ago, could come in as low as 39.0m bags a Reuters survey showed, although there was an estimate as high as 56.0m bags too.

'Black Sea tensions'

In Chicago, it was corn that got hit by profit-taking, with the May contract closing down 0.4% at $4.89 a bushel and this after hitting $5 a bushel earlier, for the first time for a nearest-but-one contract since August.

Sure, the Ukraine crisis continues to offer some support for corn, and wheat, bulls, with the country a major exporter of both grains.

"Overnight grains rallied on Black Sea tensions and continued demand," CHS Hedging said.

Darrell Holaday at Country Futures said: "The situation in Ukraine continues for provide a level of uncertainty that is supportive for corn and wheat."

However, the "problem with the Ukraine situation is that it is very difficult to find any difference in the situation today compared to 24 hours ago".

'How much is dialled in?'

And while investors were impressed by US corn export sales unveiled on Thursday, the question, as Don Roose president at US Commodities said, is "how much is already dialled in to prices?

"There are still ample supplies of corn in the US," Mr Roose told

Besides, funds now have a substantial net long position in corn, meaning this week's rising prices have delivered profits to take.

'Supported by drought'

Wheat did better, in part because funds have yet to build a huge net long position in Chicago futures and options. (Regulatory data later will reveal their actual position.)

That left less temptation to take profits. But there are also concerns over the impact of cold on US supplies.

"Wheat exports were also good and the recent rally has been supported by drought in the US southern Plains raising concerns over the condition of the winter wheat crop," US Commodities said.

The US weather outlook implies that "Texas and Oklahoma winter wheat crop ratings likely decline further into month end", Richard Feltes at RJ O'Brien said.

Wheat for May ended 1.2 % higher at $6.54 a bushel.

'Bloated with soybeans'

If there was a surprise, it was that soybeans managed to extend their headway too, closing up 1.4% at $14.57 a bushel for May delivery, despite concerns over the extent of Chinese inventories.

"China is now bloated with soybeans. The soymeal basis levels in China are in retreat and ships are backed up to unload soybeans," US Commodities said.

Country Futures' Darrell Holaday also highlighted "weakness in the soybean complex in China.

"Soymeal values continue to work lower and crushing margins continue to be poor.

"There are even reports of a shortage of storage facilities to store soymeal as the feed demand continues to collapse."

Soymeal itself for May closed up 1.5% in Chicago at $457.80 a short ton. But can the gains stick on Monday?