PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:13 GMT, Tuesday, 22nd Apr 2014, by Agrimoney.com
Evening markets: grains, cotton join coffee among ag winners

Grain prices could not match coffee for upward movement.

Arabica coffee for July soared 7.1% to 213.40 cents a pound in New York, earlier hitting 215.70 cents a pound, a two-year high for a nearest-but-one contract, after Volcafe cut its forecast for the Brazilian harvest this year, while raising its estimate for the world production deficit in 2014-15.

In fact, not even robusta coffee came anywhere near matching that, ending up 0.9% at $2,156 a tonne for July.

Volcafe's overall Brazil production downgrade included a 1.0m-bag upgrade to the estimate for the country's, smaller, robusta harvest.

Plantings progress lags

Still, back among grains, corn and wheat managed healthy gains nonetheless, staging a Turnaround Tuesday in Chicago of some note in the end.

That was especially true of corn, which gained 1.7% to $5.02 a bushel for July, in gains attributed to the US Department of Agriculture data overnight showing US seedings only 6% complete as of Sunday, above the 4% of a year before, a particularly poor sowing period, but well below the average of 14%.

In fact, brokers queued up to ease concerns over the slow pace.

Allendale, for instance, said that its research "suggests we should not be worried about late planting.

"In the past six late panting years, yields exceeded trend yield projections five times."

'Fair planting weather'

At Country Futures, Darrell Holaday doubted the accuracy of the 6% figure.

"We put little credibility in that number as we feel there was more progress," he said, adding that a "large part" of the Corn Belt was set for a strong sowings pace later this week.

Indeed, Iowa-based broker US Commodities said that "Midwest weather forecasts suggest fair planting weather for the next few days".

And CHS Hedging said that rains on Monday "moved east without causing too much concern for further field work delays."

In fact, the precipitation "will benefit newly planted seeds".

Meanwhile, the "latest extended forecast shows windows for planting headway in the 1-5 day" period.

'Severe planting delays'

Still, not all meteorologists are quite so upbeat about the weather outlook, with Gail Martell at Martell Crop Projections warning that "the weather pattern is suddenly wet.

"Widespread soaking rains are coming to the Midwest and Northern Plains where recurring showers are predicted in the upcoming week.  

"The result will be severe planting delays."

Meanwhile, for next week, MDA, noted that the forecast had turned "cooler" in the six-to-10 day forecast for the south eastern Midwest

And the sowings window will not last for ever, with many seeing the ideal planting period as ending in the first half of May, depending on the state.

No improvement in condition

Wheat for July lagged in closing up 0.6% at $6.79 a bushel for July delivery.

Still, that was a far better performance than in the last session, when the contract shed 3%, and was attributed to some disappointment at the lack of improvement in the condition of US winter wheat, as revealed in overnight USDA data.

That placed the dryness-hit crop at just 34% "good" or "excellent", the same as the week before, with some deterioration in Kansas, the biggest producing state, as frost offset a fillip from some rainfall.

'Historic drought'

And forecasts are not too positive for producers either.

"Warm, windy, and dry weather should help support winter wheat in continuing the moisture problems," US Commodities said.

Gail Martell put it that "rainfall is coming to the Great Plains, but showers are expected to miss the dry western one-third of the wheat belt.

"Drought continues to be main worry in the seven top bread-wheat states," she said, adding that "this is an historic drought".

'Alleviating concerns'

Still, not all the weather news was so positive for prices, with Europe's dry areas faring better in terms of rain relief.

"Some rains have reached dry areas of Central and Northern Europe, with more forecast," Jaime Nolan Miralles at broker INTL FCStone's Dublin office said.

"Although not in huge abundance, they go some way to alleviating concerns for winter wheat in these areas."

MDA said that rains had provided some relief for dry areas of the former Soviet Union, with more rainfall in the forecast.

 

Indeed, it was notable that Paris wheat far underperformed its US peers, falling 1.3% to E214.75 a tonne for May delivery, with the better-traded November contract shedding 1.7% to E203.25 a tonne.

That appears a sign that investors were willing to ignore the latest rumpus in Ukraine - where the killing of a politician, apparently by separatist activists, has revived tensions between Kiev and Moscow the differing performance of US wheat contracts was another.

Certainly, Chicago wheat, the speculators' favourite, didn't fare too much better than Kansas City hard red winter wheat at the heart of the drought concerns - which gained 0.4% to $7.45 a bushel.

Minneapolis spring wheat added 0.5% to $7.23 a bushel, with the USDA crop progress data showing spring seedings at 10% complete, well below the average of 19%.

Chinese losses

In fact, it was soybeans which underperformed, continuing to be undermined by talk of Chinese defaults on import orders, albeit from South America, which will nonetheless impact the world market.

"The soybean market is hearing continued talk of China working to shift soymeal and soybean cargoes purchases from Argentina and Brazil into the US," Benson Quinn Commodities said.

Chinese soybean processors "are losing the equivalent of $100 a tonne on product handled", CHS Hedging noted.

In fact, there was more talk of Argentine soymeal being sold into the US, with a cargo said to be arriving on May 1, along with continued rumours of 2-3 Brazilian cargos of soybeans on the way.

Strong EU imports

In fact, not all the news was so bearish.

China's Ministry of Commerce is estimating China's soybean imports in April at 6.9m tonnes, which would be a record high, and above the previous forecast of 5.11m tonnes.

And Oil World underlined the strength of European Union demand, pegging the bloc's imports in 2013-14 at 13.9m tonnes, well above the 12.3m tonnes at which the USDA has the figure.

EU crush margins had been "very attractive" earlier in 2014, boosted by lower-than-expected soymeal imports from South America.

'Stops hit'

Still, Abiove, the Brazilian oilseeds group, underlined the case for bears by cutting its forecast for the country's exports this season by 1.0m tonnes, citing weaker hopes for China.

And technical factors turned in bears favour too.

"The move down pushed the May and July contracts below yesterday's lows" where there were "stops hit", Country Futures' Darrell Holaday said.

"The key technical support for July soybeans is the uptrend line that extends back to late January," is currently at $14.58 a bushel," he added.

"The move today is generally an indication that the uptrend support line will be tested sometime this week."

Soybeans for July actually closed down 1.1% at $14.70 a bushel, with July soymeal ending down 1.2% at $470.30 a short ton.

Slow cotton plantings

Back in New York, cotton for July added 1.1% to 93.25 cents a pound, also feeling support from the USDA crop progress data, with US sowings of the fibre lagging.

Farmers sowed only 1% of their crop last week, taking the total to 9%, behind the average of 12% by now.

And raw sugar for May added 0.9% to 16.99 cent a pound, while the July contract added 0.5% to 17.62 cents a pound.

At Price Futures, Jack Scoville highlighted bigger-than-expected Chinese imports last month, of 411,132 tonnes, "about double the pace of the previous year", as revealed in data on Monday,.

"Calendar year to date imports are now 863,563 tons, up 63.3% from last year."

'Vulnerable to heavier liquidation'

Still, at Sucden Financial, Nick Penney cautioned about a cut in the speculative net long position in New York raw sugar futures in the latest week potentially setting a trend.

"Without further momentum on the upside we would expect the market to be vulnerable to further and heavier liquidation," he said.

"Weather, and El Nino, risk is still present so this may explain the slowness in the reduction in speculative net longs," and indeed were highlighted in US expectations for lower Thai production in 2014-15.

"But we feel that values need to move further down to attract end destination demand."

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