"Just when you thought there was never going to be any news
in the grains and oilseeds other than projected weather changes, the world
geopolitical situation slaps you in the face."
So said Darrell Holaday at Country Futures, referring to the
crashing of a Malaysian airline in Ukraine, amid allegations that it had been
This, in turn, revived the fears over the Ukraine crisis,
and the potential threat to grain exports, and to production from a weak
hryvnia, high credit costs and civic unrest.
Wheat, which rallied
earlier in the year on Ukraine tensions, was the quickest to gain this time
too, closing up 2.4% at $5.50 ¾ a bushel in Chicago, speculators' favoured
wheat market. And one in which they held a stack of short positions vulnerable
to such bullish news.
In the European Union, likely from a geographic perspective
to benefit from switched demand should buyers flee the Black Sea, Paris wheat
for November closed up 2.2% at E183.00 a tonne. (More on the wheat market reaction to the plane crash here.)
Also in wheat bulls' favour was a report from Strategie
Grains voicing concerns over the threat to EU wheat quality from late
However, the plane crash story actually overshadowed some
negative data, in terms of US wheat export sales, which came in at 321,000
tonnes for last week, below expectations of at least 400,000 tonnes, and indicating
that lower prices have yet to spark foreign demand for US supplies.
Wheat futures were standing nearly 1% lower before the plane
crash news came through.
Conversely, data for corn
– at 574,000 tonnes of old crop and 495,000 tonnes for 2014-15 - and soybeans – at a positive 38,000 tonnes
for 2013-14 and 561,000 tonnes for new crops – met or exceeded expectations.
And soybeans had the extra fillip of China buying 708,000 tonnes
of US, new crop, supplies on the day, as revealed by the US Department of
However, corn and soybean futures found headway difficult,
pressed by the background expectations of huge US harvests.
'May be a good thing'
These were helped by a turn wetter and cooler in the GFS
weather model outlook for the Midwest, where corn is pollinating, a process
vulnerable to excessive temperatures.
In fact, "it will be a bit warmer next week in a lot of
areas, but that may be a good thing in helping crop development", said Don Roose,
president of US Commodities.
There have been concerns over the lack of so-called growing
degree days in some areas, ie crops not receiving the solar energy needed to
fulfil their potential.
Commodity Weather Group - which late on Wednesday forecast
the US corn yield at a record 171 bushels per acre, above the USDA forecast of
165.3 bushels per acre – forecast that July will finish in the Midwest with "no
extensive concern" for crops.
Meanwhile, staying on the weather front, the Indian monsoon
is expected to keep improving, and narrowing its deficit to average rates, with
soybean-producing districts already fingered as having enjoyed better
"The slow-to-begin monsoon in India has improved this week.
This is likely a bigger feature for their oil seed production," said Benson Quinn
This is in fact co-inciding with some weakening in the El
Nino signs, with Pacific water temperatures remaining below threshold levels in
the first half of this month. (El Nino is associated with weak monsoons, besides
dryness in much of Asia, Australia, and West Africa.)
Certainly, markets lacked the oomph to prevent November soybeans surrendering the $11-a-bushel
mark again, closing down 0.7% at $10.94 a bushel, little helped too by bearish analysis by Jefferies Bache.
December corn, pulled higher by fellow grain wheat, actually
managed gains, but only small ones, adding 0.1% to $3.87 ¼ a bushel.
Strong cotton exports
Cotton sided with
corn, in posting a small gain – of 0.01 cents to 67.54 cents a pound in New
York - helped by decent US export sales of 342,786 running bales for 2014-15,
which starts in two weeks' time.
That was the best new crop figure for two years (ie, better
than 2013-14 ever achieved before it became the current crop year).
The disappointment was that only 24,800 running bales were
bought by China, a particularly sensitive market, as Commerzbank discussed in a
somewhat bullish perspective on cotton price prospects.
And arabica coffee
extended its recovery from a five-month low of 159.25 cents a pound reached on
Tuesday, closing this time up 0.8% at 183.85 cents a pound for September
"Production and condition reports coming from on the ground
are consistently reflecting a weak harvest," Citigroup's Sterling Smith said.
Cocoa was little
changed ahead of North American grinding data due shortly, with September
contracts ending up 0.1% at $3,064 a tonne in New York, and by the same at
£1,891 a tonne in London.
Raw sugar for
October eased 0.9% to 16.92 cents a pound – the contract's first close in five
months below 17.00 cents a pound amid ideas that Brazilian mills are continuing
to favour making sugar, rather than ethanol, from cane.
"With the recent dry weather, millers seem to be maximising
sugar production out of the resulting higher ATR [sugar concentration] in the
cane," Nick Penney, senior trader at Sucden Financial, said.
This means that should cane supplies run short, as has been
widely predicted after the early 2014 drought, mills "will have enough sugar to
take advantage of a resulting rally in price" expected then for sugar.
However, current the ramp up in supplies is for now being "reflected
in the lower physical prices, which have not as yet attracted demand, and the
weakness has been translated to the futures market both in terms of flat price
but especially in the market structure", Mr Penney said.
While the world's "near term supply glut has been well documented,
we are now seeing weakness into next crop year with the market anticipating a
trade surplus into the first half of 2015".