Coffee futures were the star among agricultural commodities on
Thursday, soaring 7% (as reported here).
But they weren't the only gainers although, as ever in the
current market climate, it took quite a bit of effort to get grains and
Especially on the last day of the month, associated with
market weakness as funds withdraw cash.
Wheat futures got
some help from strong US export sales data, of 801,000 tonnes last week, well
above expectations of at most 550,000 tonnes.
Brazil, a bit hard red winter wheat buyer, extended its
purchases, meaning it has ordered, or already received, 965,000 tonnes of US wheat
for 2014-15, less than two months in, not far below the 1.23m tonnes this time
a year ago, amid worries over the South American country's domestic supplies.
That said, many commentators are cutting expectations for
this year's Brazilian wheat crop, which the official Conab crop bureau has
pegged at a record 7.4m tonnes, thanks to some frosts this month, besides the unusually
strong rains of late which are receiving a mixed reception.
While raising soil moisture for soybean sowings, expected to
start in September, the rainfall is not so welcome at a time of corn and cotton
harvesting, besides causing the premature flowering helping life coffee
In Europe, rains are still proving most unwelcome for wheat
growers, in threatening grain quality.
Indeed, ADM Germany, formerly known as Toepfer
International, reminded of the problems in France, where Hagberg falling
numbers, a key milling specification, measuring sprouting, "France will
presumably be very low", the trading house said.
This means that "a substantial part of the quantities that
were originally planned to be exported to Algeria are not likely to be executed",
driving French merchants to buy supplies from Germany and Poland as
alternatives, as Agrimoney.com has reported.
(As Agrimoney.com has also trailed, the UK wheat crop is bucking the trend, so far, with some excellent Hagberg numbers, if weak protein
levels, although rain is in the forecast.)
of quality downgrading'
Meanwhile, the International Grains Council made one of the
first attempts to quantify the damage to Europe's crop by raising the amount of the grain used in the EU as feed, as downgrades of milling wheat kick in.
"Amid a fairly heavy wheat supply outlook and increasing
evidence of quality downgrading in the harvest, feed use in the EU is forecast
to be up by 6.2m tonnes, to 49.5m tonnes," the council said.
The IGC trimmed by 1m tonnes to 3m tonnes its forecast for
growth in world wheat inventories in 2014-15.
Chicago wheat for September closed up 0.6% at $5.30 ¼ a
bushel, closing back above its 10-day moving average.
While Paris wheat for November slumped 2.9% to E170.50 a
tonne, a fresh four-year closing low for a spot contract, this market has
become hard to read thanks to uncertainty over the specifications for what
wheat is actually deliverable against the contract.
"Physical basis shows a rarely seen volatility as a result
of concerns over quality and uncertainties about the nature of quality
requirements on the underlying Euronext contract," Agritel said.
"These uncertainties should be quickly removed to avoid loss
of hedging efficiency."
Co-operative Soufflet, which operates one of the delivery
points for Matif wheat, said on Wednesday that it is awaiting further
information on the French harvest before deciding on its acceptance policy.
UK merchant Gleadell said that Paris wheat "may soon become
a 'feed wheat contract' with the criteria to deliver considerably lower than
the specification needed for export".
'Area of concern'
Back in Chicago, soybeans
crawled higher, ending up 0.1% at $10.82 a bushel, given some support by decent
US export data, of 174,000 tonnes of old crop and 1.09m tonnes of new, in line with
the top end of market expectations.
But perhaps a bigger help was some worries over dryness
damage to US soybeans entering their sensitive pod-setting period.
"The midday GFS weather model was drier than the previous
runs in the western areas," said Darrell Holaday at Country Futures.
"In my mind the only area of concern, and it is a concern,
is the Missouri River Valley, and the concern is the soybeans.
"The run at midday was not as generous with the moisture in
the Missouri River Valley as the previous runs."
There was also some comment over the miss by Argentina, a
major exporter of soybeans and soy products, of its deadline for paying off hedge-fund
bond investors with which it has been in a legal battle.
So Argentina is now in default.
"This news was not wholly unexpected and is not expected to
have much immediate impact on the markets," Benson Quinn Commodities said.
"But in the long term it could shut off sales of beans by
Argentine producers as they once again take to holding soybean stocks for
better currency exchange rates in the foreseeable future as default will weigh
on the Argentine currency."
'High yields are
Corn for December,
however, failed to join the rally being largely past its vulnerable pollination
stage which could have put upbeat forecasts for US yields at threat.
Sure, US export sales were OK good 174,000 tonnes, plus 1.09m
tonnes for 2014-15, but within the range of forecasts, and not enough to
"The key factors remain the same as before - the weather is
perfect in the growing areas of the US Midwest, meaning that high yields are
anticipated," Commerzbank said.
December corn ended down 1.3% at $3.67 a bushel, a contract
closing low, little helped either by strong South African export prospects.
For cotton, US
export sales appeared not too bad, at 254,400 running bales for 2014-15, including
104,700 running bales for the sensitive market of China, whose demand is being
particularly closely watched thanks to changes to its domestic subsidy regime.
Actual exports, at 118,400 running bales, soared 64% week on
But it was not enough to prevent a fresh lurch lower by December
futures, which ended down 1.8% at 62.37 cents a pound, a fresh contract closing
low, with investors still concerns over the implications of China's reforms,
and with expectations for the US crop rising.