Ag futures managed a, slightly, more positive end to the
week than the beginning, if only thanks to investors taking profits on short
positions for which the easy profits may have been made for now.
Sure, there were some fundamental reasons for investors to
turn more bullish, such as in coffee, where concerns over the Brazilian harvest
lifted futures, as discussed elsewhere on Agrimoney.com.
But there was also plenty of talk of "end of the week short
covering", with investors taking profits on short positions as "oversold"
conditions make more downward movement in prices potentially less easy.
And prices, while broadly higher in late deals, were well
below earlier highs.
'Could just be too
In fact, there was more talk of the US weather, but with
less mention of any potential heatwave, enemy number one for upcoming corn
pollination, but more of excessive rains.
"Rains are forecast for the weekend over central Minnesota
down through eastern Nebraska, and if realised come Monday it could just be too
much," Benson Quinn Commodities said.
"The old adage is that 'rain makes grain'. But corn standing
under a couple inches of water is not good.
"Rains over Minnesota have been well-above-average year to
date, and the forecast 2 inches plus of rain will be too much for the young
After all, it was excessive precipitation, albeit including
hail, which was behind a drop in the Nebraska crop ratings revealed on Monday.
Corn for July closed up 0.7% at $4.47 a bushel in Chicago,
while the December lot gained 0.9% to $4.47 ½ a bushel.
Rains further south are, of course, not so good for the wheat harvest either, stoking concerns
over the quality of a southern Plains crop already hurt, quantity wise, by
drought for much of the growing season.
"Rains in Kansas and Oklahoma continue to slow or stop
harvest with quality concerns mounting due to excess moisture," broker CHS
"Reports out of the south continue to solidify the poor
conditions due to early drought and cold temperatures this winter and spring."
It was notable that hard red winter wheat, as grown in the southern
Plains, performed particularly well, adding 1.1% to $7.13 ¼ a bushel.
'Light and erratic'
And the concerns over dryness in parts of Russia, notably
the Volga Valley region, bleeped on the radar too, with much-anticipated rains
this week turning out to be "light and erratic" according to World Weather.
Furthermore, "today's forecast is drier for much of the region
through the next week to 10 days
"Rainfall advertised through the next seven days will be
less than 0.60 inches in the middle and lower Volga River Basin which is
inadequate relative to evaporation."
Still, with prospects in the rest of the world OK, Chicago
wheat for July ended up a modest 0.1% at $5.86 a bushel, and well below its
intraday high of $5.94 ½ a bushel.
Soybeans did a
little better, adding 0.7% to $14.25 ¾ a bushel, given a smidgen of support
from a downgraded by Informa Economics of 293,000 acres, to 81.778m acres, in
its forecast for US sowings this year.
That was, however, above the 81.493m acres the USDA has
pencilled in, although the Informa production estimate, of 3.591bn bushels, was
below the official forecast of 3.635bn bushels.
Informa is assuming a yield of 44.5 bushels per acre, below
the 45.2 bushels per acre the USDA is using.
But soybeans also got a hand from soyoil, which flew 2.9% to 39.69 cents a pound for the July
contract, retaking its 10-day and 20-day moving averages.
A pick-up in prices of rival vegetable oil palm oil have helped.
"Low prices have stoked some new hopes that exports will
climb," Citigroup's Sterling Smith said..
"Port stocks decreased… and this is creating a spot where
demand can pick up."
Jefferies Bache noted that "India's monsoon is off to an
inauspicious start which could also be supportive for vegetable oil prices",
with the country a major importer.
Still, technical factors played a part too, with Jefferies
Bache highlighting "liquidation of long soymeal
versus short soyoil spreads" which have been a popular bet.
Soymeal itself finished 0.3% lower at $467.90 a short ton
for July delivery.
And, going back to soybeans themselves, there is still the
issue of a large net long position, including it would seem in the July
contract, with the expiry process on the horizon.
"Use caution if trading July soybeans, as open interest
continues to deteriorate quickly," CHS Hedging said.
And at broker RJ O'Brien, Richard Feltes said that
regulatory data due later, after the close of markets, "show that managed funds
are still precariously long corn and soybeans going into nearly ideal early