Corn futures failed
at the last gasp.
The best-traded December contract looked like it was about
to break its run of losing calendar months stretching back to May.
But the contract, after a decent performance in the
overnight session, faltered in the day one to close at $3.64 ¾ a bushel, down 1.2%
on the day and 2.25 cents for August.
It looks like funds lost their inhibitions over taking on a
bit of risk on the last trading day of the month, typically seen as a period of
position closing as investors tidy up positions and withdraw cash.
Sure, it is possible the weekend could bring a forecast of
frost for the US, which would be a price supportive factor.
But the current outlook appears more favourable.
"Weather leans negative [for prices] with warmer temperatures
next week - excellent for final
kernel/pod fill – an and ongoing active Midwest precipitation pattern,
including weekend relief for dry portions of northern Delta," said Richard
Feltes at RJ O'Brien.
Bears could also take comfort in the strong US harvest so
"Delta corn yields are scoring records - upwards of 225
bushels per acre are being reported," said broker
Furthermore, the International Grains Council upgraded its estimate for world corn stocks as of the close of 2014-15 to a 27-year high.
And wheat, the main
prop of the grains market suffered a setback, despite continued unrest in Ukraine,
and raised tensions between Kiev and Moscow.
With Russia and Ukraine both major exporters of
competitively-priced wheat, the wheat market has been something of a barometer
of regional tensions.
The dispute kept simmering on Friday, with Nato accusing Russia
of a "blatant violation" of Ukraine's sovereignty and of engaging in
direct military operations to support pro-Russian rebels.
Seven Nato states are also creating a new joint
expeditionary force of at least 10,000 personnel to boost the organisation's muscle
in response to Russian aggression in Ukraine.
Meanwhile, Mariupol, site of an important grains port, dug
in against the approach of pro-Russian rebels.
Still, Minneapolis-based Benson Quinn Commodities said that
"minor escalations in the Ukraine/Russia conflict ahead of the weekend tends to
die down over the weekend".
In the UK, David Sheppard, managing director at Gleadell,
noted that while markets have often seen end-of-week rises thanks to Ukraine
tensions, "to date the market gives it back by Monday".
Certainly, Chicago wheat closed down 1.4% at $5.63 ½ a
bushel for December delivery, staying just above its 50-day moving average, and
recording a small price gain for the month.
And in Paris, milling wheat for November closed down 0.4% at
E172.50 a tonne, little phased by the talk of a quality-damaged German crop.
That said, is Paris [Matif] milling wheat really milling
wheat, given the loose specifications for delivery?
"With the spec only being feed wheat at best many are
questioning what exactly the Matif contract is or stands for anymore – other
than some sort of French farce," Mr Sheppard said.
'High levels of
In fact, quality is becoming increasingly an issue for the
US spring wheat crop too, with the rains protecting row crop yields a negative
for spring wheat harvest progress and quality.
Allendale reported that its North Dakota clients "finding
high levels of deoxynivalenol", aka Don, or vomitoxin, "in the harvested spring
"Most early planted spring wheat is coming in at 3-7 parts per
million," at a time when "many elevators are discounting about 40-60 cents a
bushel for a Don of 4-5ppm".
Furthermore, there is "also some concern about wheat
sprouting in the head with the weather we are having".
This after a US soft red winter wheat scoring high on Don
too, although it has to be said that US Wheat Associates took a less downbeat
view of the crop, despite acknowledging that "heavy rainfall and high humidity
halted the small grain harvest in some areas where it had started".
US Wheat Associates, which promotes US wheat exports, said
that average protein so far on US hard red spring wheat was in line with last
year, at 13.6%, and test weight, at 61.5 pounds per bushel (80.9 kilogrammes
per hectolitre), down from last year's final average of 62.3 lb/bu (82.2 kg/hl)
but not a disaster.
Furthermore, the "falling number average is over 400 seconds
indicating a sound crop at this time".
Minneapolis spring wheat for December dropped, if by a
modest 0.4% to $6.29 ¾ a bushel for December, up 3.5 cents for the month.
too, by 0.4% to $10.24 ¼ a bushel for November delivery, just above the
contract's lowest ever close.
"Reports from the Delta tout huge 80-90+ bushels-per-acre
yields with moistures of 13.5%-14.5%," CHS Hedging said.
"The US Department of Agriculture is carrying the Louisiana
yield at 50 bushels per acre and Mississippi at 48 bushels per acre.
While the USDA unveiled the export sale of 123,000 tonnes of
soybeans to China, this was dismissed by RJ O'Brien's Richard Feltes as
Among soft commodities, cocoa
for December closed up just $1 a tonne in New York at $3,229 a tonne,
retreating from an intraday high of at $3,281 a tonne, after the International
Cocoa Organization ditched ideas of a world production deficit this season.
Instead, the world was in for a 40,000-tonne surplus, the
ICCO said, noting unexpectedly high West African output.
London's December lot dropped 0.8% to £2,017.