Gremlins did their best to unsettle the rally in grains.
"Technical issues" shut down the CME Group's Globex electronic
trading system for dealing in futures and options in many commodities, mainly
agricultural ones - corn, wheat and all three livestock contracts
(feeder and live cattle and lean hogs) among them.
But while the Globex system, which typically handles more
than 90% of volumes, was "halted", there was still enough activity in the good
old-fashioned open outcry market to get prices moving higher.
If there were any nerves among bulls ahead of the US
Department of Agriculture's monthly Wasde crop report, due tomorrow (Wednesday),
they weren't showing.
Crop condition falls
Another hiccup - this time a delay from Monday to later
today in the US Department of Agriculture's first national crop progress report
of 2014 – failed to provoke too many nerves.
Information gleaned from individual state reports showed the
drought-pressed southern Plains winter wheat crop (mainly Globex-traded, Kansas
City hard red winter wheat) continuing to deteriorate where it counts, in
Kansas and Oklahoma, now below year-ago levels in both states.
As for benchmark soft red winter wheat crop, while only
limited data is available from Midwest growing heartlands, USDA scouts did
report the Illinois crop at 47% rated "good" or "excellent", better than hard
red winter wheat but below the 72% a year ago.
Besides, the weather outlook is hardly ideal.
While there are chances for rain for hard red winter wheat
country over the next couple of weeks, they will still leave some 40% of crops
dry, Commodity Weather Group said.
And the midday weather outlook for the region actually "went
drier", said Dan Cekander at broker Newedge.
At Martell Crop Projections, Gail Martell said: "The new
weekly rainfall forecast is not hopeful for rain in Kansas.
"The rainfall was downgraded from Monday now much drier in
the leading US wheat state."
And investors retain some worries over dryness too in parts
of the European Union as well as in Ukraine, where political considerations
also hold potential hazards.
Soft red winter wheat for May closed up 0.7% at $6.81 a
bushel in Chicago, while hard red winter wheat for May ended up 0.3% at $7.42 a
Corn did even
better, jumping 1.6% to $5.07 a bushel in Chicago for May delivery, while the
new crop December contract protected its premium by adding 1.5% to $5.13 a
bushel – the lot's best finish in seven months.
Thursday's Wasde took some of the credit, in being expected
to reveal a downgrade of 53m bushels to 1.403bn bushels in the USDA forecast
for domestic stocks at the close of 2013-14.
But again, weather was seen as a factor too, in showing a cooldown
early next week, after warmer temperatures for the rest of this week.
Midwest farmers are hoping for warmer and somewhat drier
conditions to get fieldwork completed and seeds germinated.
"The seasonably cold temperatures in the extended weather
forecasts may be adding premium into the markets today," CHS Hedging said,
noting forecast that "rain-soaked soils in the eastern Corn Belt look to remain
cold through next week.
Such conditions would not be expected to create "the ideal
seed bed, especially for mid-April".
At Chicago broker RJ O'Brien, Richard Feltes said that it
was "too early to declare a worrisomely-late planting season.
"But we can say with confidence that an early-planted corn
crop is unlikely which trims the odds of a record 2014 US corn yield."
At Soybean and Corn Advisor, Michael Cordonnier also noted a
reluctant among Brazilian growers to sell because of expectations of a smaller second,
or safrinha, crop, easing pressure on the market from that score.
"Parana farmers have harvested 75% of their full-season corn
crop but have only sold 27% of the crop thus far," Dr Cordonnier said.
'Bull spreading is
ground too, closing up 1.3% at $14.82 ½ a bushel for the May contract, which
outperformed the 0.8% rise to $12.17 ½ a bushel in the new crop November lot.
"Bull spreading is back on beans," said Jerry Gidel, chief
feed grains analyst at broker Rice Dairy.
The trigger was viewed as the prospect of Wednesday's Wasde
cutting the forecast for US soybean stocks at the close of 2013-14, if only by
6m bushels, to a tight 139m bushels.
Soybean sowings actually stand to gain from delayed corn
plantings, given that the oilseed can be later seeded.
Among soft commodities, a somewhat bullish attitude reigned
too, helping New York arabica coffee
futures for May climb back above 200 cents a pound temporarily (to 202.80 cents
a pound) before easing to settle at 196.50 cents a pound, a gain of 1.6% on the
Jack Scoville at Price Futures Group noted "forecasts for
dry conditions in Brazil for the week", hitting a raw nerve, with drought in
the country's central coffee (and cane) belt fuelling the rally from prices around
110 cents a pound in January.
Brazilian forecaster Somar said that "throughout this week,
we should have little or no chances of rain in most coffee areas".
And a stronger Brazilian real, which gained 0.7% against the dollar, added extra support, in supporting prices of assets, such
as many agricultural commodities, in which the country is a major player.
In London, robusta
coffee futures for July closed up
2.6% at $2,166 per tonne, supported by a rise in Vietnamese prices to a three week
high of 41,000 dong per kilogramme, equivalent to about $1,940 per tonne.
El Nino fears
Raw sugar for May
gained 1.3% to 17.16 cents a pound in New York, supported by the stronger
Brazilian real and the forecast for Brazilian dryness, but also by the growing
expectation of an El Nino ahead.
These weather patterns tend to bring undue wetness to
Brazil, not ideal during the cane harvesting season, which is ramping up now,
and lasts until late November or so.
Australia's Bureau of Meteorology said the odds of an El
Nino developing in the May-July period now exceed 70%.
New York cotton for
May rose 1.3% to 91.79 cents a pound, helped also by expectations for a bullish
Wasde report for the fibre, but with concerns also remaining over dryness in
Texas, and with hopes nudged up a little for Chinese purchases.