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Evening markets: wetness fears give corn, soybeans late lift

There was cause for a lot of the day to think that soybean futures might score a bullseye.

That is, to close exactly on the $14.00-a-bushel mark that the options market would dictate.

Futures often tend to feel the pull from clusters of expiring options, as occurred for July puts and calls on Friday.

And "options expire today with significant open interest in the $14.00 puts," CHS Hedging noted earlier.

"The soybean market is giving some back today as we migrate towards the expiring July $14.00-a-bushel option strike."

'Fairly active option trade'

Still, there were other gravitational pulls to negotiate before getting as low as that level.

Benson Quinn Commodities noted "fairly active option trade near key strikes, $14.10 a bushel and $14.20 a bushel in soybeans", besides of $14.00 a bushel.

And, in the end, the July contract closed between these top two, at $14.15 a bushel, recovering from a low of $14.02 a bushel reached earlier.

After all, on fundamentals, while concerns over tight old crop US stocks do not seem as acute as a month ago, they have not disappeared.

'Worse for soybeans'

And on new crop, there worries over wetness remain alive, with Michael Cordonnier, the influential crop scout, saying that 1m-2m acres of crops overall may be lost to the excessive rains in north western Midwest states, notably Iowa, Minnesota and South Dakota.

"It looks worse for soybeans because they do not like saturated conditions," he told

"Taller corn crops can stand it a bit more."

And much of this lost area is likely to remain too wet to be replanted,

'Increase wetness concerns'

MDA forecast that while Midwest rains will "favour central and eastern areas today", they will "return to western areas tomorrow through Monday.

"Continued rain across Nebraska Iowa, southern Minnesota and southern Wisconsin through the weekend will increase wetness concerns."

As an extra prop to new crop futures, the US Department of Agriculture unveiled the export sale of 110,000 tonnes of soybeans during 2014-15.

Soybeans for November ended 0.3% higher at $12.31 a bushel, its best finish of the month.

DDG imports

The wetness concerns were a prop to corn too, which also faced its own pull from options, at $4.50 a bushel.

Still, after looking spot on for a $4.50 a bushel close for much of the day, the July contract closed up 0.5% at $4.53 a bushel.

China provided some the too, with CHS Hedging noting talk "that China may be relaxing the recent suspension of distillers' grains imports from the US is adding a touch of support".

In fact, there have been rumours of China proving more amenable to MIR 162, the Syngenta corn variety at the heart of curbs on imports of US corn and of distillers' grains (DDGs) the feed byproduct of corn ethanol manufacture.

Huge inventories

Still, the new from China is not all bullish, with mounting talk of huge stocks too.

"China says their grain stocks have increased to 350m tonnes, which includes 150m tonnes of corn," CHS Hedging said.

"They are trying to find ways to consume them to free up space, and cash.

"The recent auctions have not netted the expected results and they are considering increasing exports."

Not that, with Chinese costs so high, they look like proving a huge threat for now to other origins.

Backed by the wetness fears, December corn soared 1.0% to $4.52 a bushel, nearly back up at its 20-day moving average at $4.52 a bushel.

'Potential vomitoxin problems'

Wetness has been a concern for wheat too, more over quality for the winter wheat crop, with moisture raising concerns of sprouting on ripe grains, besides of disease on less developed crop.

"Lower yields, fungal diseases and IDKs [insect damaged kernels] are all being seen and lending support to the wheat market," US Commodities said.

CHS Hedging noted that "concerns are starting to circulate about potential vomitoxin problems in the soft red winter wheat crop due to the excessive precipitation".

And, for spring wheat, the good old problem of logistics has re-emerged too.

"Spring wheat basis levels continue to firm on tight logistics.

"The railroads are using the excuse that the rains have softened the tracks and some areas are not receiving rail service and have last half June commitments."

'Harvest pressure'

Still, wheat could not follow corn and soybeans higher, pressed by ideas of drier weather for Plains areas where harvest is gearing up.

 "We are starting to see some harvest pressure develop in the wheat market," Darrell Holaday at Country Futures said.

"Weather conditions should allow for continued harvest progress through Sunday."

Furthermore, "EU wheat production forecasts continue to increase as weather conditions the last 60 days have been ideal," with Coceral upping its estimate for the bloc's harvest to the second-best ever.

Chicago soft red winter wheat, the world benchmark, closed down 1.4% at $5.85 a bushel, while Kansas City hard red winter wheat, the type being harvested in Kansas and Oklahoma, dropped 1.2% to $7.20 a bushel for July dropping below its 20-day moving average.

In Europe, Paris wheat for November closed unchanged at E188.25 a tonne despite the EU harvest hopes, having underperformed in the last session.

Season of two halves

Among soft commodities, a strong day for arabica coffee in part thanks to the World Cup - as reported elsewhere on

Raw sugar for October gained too, although less so, by 0.3% to 18.75 cents a pound for October delivery, with the World Cup getting a mention in dispatches here too, in distracting Brazilian producers from selling, but growing mention too of a potentially poor end to the country's cane crushing season.

Brazilian sugar and ethanol group Sao Martinho mentioned it in a forecast of prices going back to 20 cents a pound.

At Sucden Financial, Nick Penney, senior trader, said that "whether producer selling comes in at 19 cents a pound and above is a moot point.

"Brazilian producers at least may be reluctant to overextend pricing in the light of potential weather issues in the second half of the year," besides because of potential changes in Brazil's ethanol policy towards an increased blending rate into gasoline.

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