The recipe for grain price gains, Ukraine tensions and duff
weather, kicked in again to encourage investors to inject extra risk premium
into futures heading into the weekend.
Equity markets shifted into reverse as Western leaders upped
the talk of sanctions against Russia over its, alleged, role in stoking the
unrest in eastern Ukraine.
Angel Merkel, the German chancellor, said: "I spoke to the
Russian president this morning and made clear again that on the one hand
Ukraine has taken a whole series of steps to implement the Geneva accord but on
the other side I see no Russian backing for the accord."
down 0.3% in London, and by 1.5% in Germany, while standing 1.0% lower in New
York in late deals.
'Notable dryness and
But, with the Black Sea a huge wheat export region, wheat
moved in line with the market tensions, closing up 1.7% at $7.08 ¼ a bushel in
Chicago for July delivery, and with the positive feeling even spreading to
Paris, where wheat for May closed up 0.6% at E217.25 a tonne.
And the rally was backed by concerns over dryness in the
southern Plains, hard red winter wheat country, as reflected in a 1.9% gain in
Kansas City hard red winter wheat for July to $7.79 ¾ a bushel.
"The confidence of rain in the hard red winter wheat areas
is low," said Darrell Holaday at Country Futures.
In fact, weather service MDA said that an "upturn in rains
in western Nebraska, north eastern Colorado and north western Kansas later this
weekend and early next week should improve moisture and wheat conditions a bit.
"But notable dryness and stress will continue in south western
Kansas, western Oklahoma and western Texas, as rains remain very limited there."
'Stall corn planting'
Meanwhile, the US is getting rain where it is not needed, in
the Midwest, as farmers try to catch up on late corn sowings.
"A significant increase in rains across the Midwest and Delta
this weekend and early next week will stall corn planting, and cooler
temperatures later next week will slow corn germination," MDA said.
Mr Holaday said: "Confidence that there will be significant
rain in the Midwest Sunday through Tuesday, that will stop planting for several
days, is high."
Benson Quinn Commodities said: "Corn is finding support on
wet weekend forecast with central Midwest set to receive 2-4 inches of rain,
which is seen delaying corn planting now into early May."
There were still plenty of commentators queuing to downplay
the risk to yield yet – after all US farmers sowed more than 40% of a bigger
area with corn in one week last year, with interpretation of the weather
outlook as ever differing.
"This year's US corn plantings will remain behind their
five-year seasonal pace, but the coming week's corn seedings will make up some
ground on the normal 27-29%, five-year average rate for late April each year
because of warmer temperatures," said Jerry Gidel, chief feed grains analyst at
broker Rice Dairy.
But the International Grains Council's citation of sowing
delays, besides a smaller forecast for planted acres, as behind a 10m-tonne downgrade to 350m tonnes (13.8bn bushels) in its forecast for the US corn harvest this year
was more in line with the market zeitgeist.
Corn for July added 1.1% to $5.12 ¾ a bushel, very nearly
its best close since August.
'Easing some of the
even better gains, helped by some retreat in the fears over China, as evident
in the rise in Dalian futures overnight.
Talk of China bringing forward sales from state inventories
"It sounds like China will not be offering state reserve soybeans
in an early May auction which is easing some of the pressure seen on the market
earlier this week when beans were down as much as $0.60 from last Friday's
fresh intraday contract," Benson Quinn Commodities said.
And Bunge chief executive Soren Schroder eased concerns over
poor Chinese soybean crush margins, dismissing it as a "short-term problem".
The firmness in prices played to improved technical observations.
"Soybeans are trading higher on follow-through technical
support, with the July contract holding key support at $14.60 a bushel in
yesterday's price action and overnight," Benson Quinn noted.
Soybeans for July closed up 1.6% at $14.94 ¼ a bushel.
They also gained supported from India, where prices rose to
a 20-month high after the government forecast for monsoon rains at 95% of
This was a forecast "traders read to indicate drier conditions
than the report would show at face value", broker Jefferies Bache said.
Elsewhere among oilseeds, canola continued its rebound in Winnipeg too, soaring 3.1% to Can$474.30
a tonne, helped by a 101,000-tonne order by Pakistan of Canadian supplies, at up
to $589.00 a tonne c&f, on top of the bullish Canada plantings data
released on Thursday.
Soft commodities could not keep up with grains, undermined
for July tumbled 3.6% to 207.00 cents a pound, as investors took profits on headway
earlier in the week on a Brazil crop downgrade by Volcafe, which sent futures
to a two-year high.
A weaker real, which
shed 1.3% against the dollar, did
little to help, reducing the value in dollar terms of assets, like coffee, in
which Brazil is a major player.
Still, the story of Brazil's drought hit crop has much more
to play out, with harvest only in its infancy, and the CNC producers' group
pointing out that, ironically, heavy rains might now come into the picture to
slow harvesting, if the El Nino weather pattern sets in as meteorologists
"Heavy rains can occur during the Brazilian winter, with the
highest concentration in the south," the CNC said, adding that "this period coincides
with the harvest coffee, generating concern of greater losses by falling grains".