Rains, which in Brazil knocked some of the stuffing out of coffee last week, did the same to wheat on Wednesday, helping drive it
back below $7 a bushel.
Actually, other reasons were given for the grain's fall too,
one being the wane in Ukraine concerns for now, which helped some stock markets
post gains, with Frankfurt shares
closing up 1.2%.
And then there is the prospect on Monday of two key US
Department of Agriculture reports, one on US grain stocks and the other on
spring planting prospects.
Investors have started "squaring positions ahead of next
week's key USDA stocks and planting intention reports", Benson Quinn Commodities
said, with the stocks report in particular having a habit of producing large
"Little fresh news has allowed market to soften moderately
after recent run up in prices, as fresh longs trim risk."
After all, hedge funds have moved to holding their largest
net long position in agricultural commodities in three years, notching up many gains
in the process, at least for early movers, to judge by performances by futures in
the likes of wheat, coffee and lean hogs.
The market is now "trimming risk with long range fundamental
outlooks both domestically and globally still bearish", Benson Quinn Commodities
Hard vs soft
However, it was rain which was given as the biggest cause of
And, indeed, it was notable that Kansas City-traded hard red
winter wheat, grown on the southern Plains where drought has been a big concern,
fared particularly badly, losing 2.4% to $7.73 a bushel for May delivery.
Chicago-traded soft red winter wheat, grown largely in the
Midwest, where dryness is of little concern, dropped 1.6% to $6.96 ¾ a bushel
for May, keeping just above its 10-day moving average.
'A little bit wetter'
"Models for next week are actually a little drier in the midday
run, but the projections for the next three days have become a little bit
wetter," Darrell Holaday at Country Futures said.
"In addition, the system moving out of Texas and up through
Oklahoma wheat areas is amounting to more moisture than was projected.
"That system is probably responsible for most of the selling
CHS Hedging said: "Improving weather in the major wheat
areas in addition to moisture in the southern US belt is pressuring prices."
'Too light to ease
Not, it has to be said, that weather fears are over either
in the US or abroad.
MDA cautioned that showers in the southern US today "should
be too light to ease dryness and stress on wheat", if acknowledging that the six-to-10
day outlook is wetter in central and south eastern areas of the Plains wheat
In Australia, there were ideas that recent rains have not
been enough to refresh east coast soils ahead of autumn plantings, with official
meteorologists cautioning over the likelihood of further dryness in the region
ahead, with an El Nino a likelihood.
Still, the weakness spread to Paris too, where wheat for May
fell 1.2% to E210.50 a tonne. London wheat for November, the best traded
contract, dropped 1.1% to £159.80 a tonne.
'Negative for corn'
Back in Chicago, wheat's rise was, on the face of it, a
negative for corn too, both grains being
rivals for many uses.
And corn had an extra negative from ethanol data, which showed falling US production, down 6,000 barrels
a day to 885,000 barrels a day last week. But inventories rose anyway - up 376,000
barrels if, at 15.65m barrels, not being large for the time of year – a potential
sign of softer demand.
Ethanol itself fell 0.9% to $2.944 a gallon in Chicago for
April delivery, dropping further from Monday's rise above $3.00 a gallon for
the first time since July 2011.
Mr Holaday also warned that the US weather outlook is "negative
for corn as it indicates warmer temperatures in the Midwest along with some
spring rain moving through the Corn Belt next week".
Both warmth and rain will be a boost to prospects for helping
corn seedlings off to a decent start.
Indeed, US Commodities said that corn prices were "under
pressure as warmer forecasts will help improve southern and Midwest planting
prospects and fieldwork".
Furthermore, "Chinese buyers are thought to be waiting for
the government to sell state reserves or for cheap corn to become available
from Ukraine," US Commodities noted.
However, there was a twist from wheat's decline in that it offered
some support to corn too, given the way that investors have placed their bets.
"There is some
unwinding of wheat/ soybean and
wheat/ corn spreads today and that is providing some support for corn and
soybeans," Mr Holaday said.
Corn for May in fact closed down 0.4% at $4.84 ½ a bushel.
Dog fails to bark
Soybeans for May in turn gained 0.8% to $14.40 a bushel.
The oilseed was also given assistance by another day passing
without the announcement of order cancellations by Chinese buyers, putting extra
strain on the US balance sheet.
The US Department of Agriculture is expecting sizeable
cancellations even to get domestic stocks to a thin 145m bushels at the close
remains in demand, adding 1.2% to $469.10 a short ton in Chicago for May
delivery, offsetting a marginal loss to 40.73 cent a pound in soyoil, which was weighed by weakness in
rival vegetable oil palm oil in Kuala Lumpur.
Cotton tumbles from
Among soft commodities, cotton
found its early spring to two-year highs, on a spot contract basis, of 97.35
cents a pound for the New York May contract heralding a collapse back to 91.66 cents
a pound at the close, a drop of 2.6% on the day.
Has the fibre again notched up its high in March?
The contract closed below its 10-day moving average for the
first time in nigh-on a month.
But arabica coffee's
descent ran into turbulence, as investors attempted to assess just exactly how
much relief rains have given to drought-hit Brazilian plantations.
"Rains last weekend were less than expected, but overall the
rains in March have been beneficial," was the assessment of Jack Scoville at
Price Futures, who also noted that "forecasts for Brazil call for mostly dry conditions
for the next week".
New York arabica coffee ended a topsy turvy session, up 0.4%
at 176.00 cents a pound.
Raw sugar did
even better, jumping 2.3% to 17.36 cents a pound in New York for May delivery, the
highest in nearly two weeks, amid continued concerns over the potential for El
Nino to disrupt production.