PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:43 GMT, Tuesday, 8th Apr 2014, by Agrimoney.com
Evening markets: grains rise to meet US data, Coffee up too

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.

'Went drier'

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 bushel.

 

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.

'Adding premium'

"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 back'

Soybeans gained ground too, closing up 1.3% at $14.82 a bushel for the May contract, which outperformed the 0.8% rise to $12.17 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.

Brazil dryness

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 day.

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.

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