Wheat futures managed
to get to $7 a bushel in Chicago, but it couldn't stay there.
Actually it was just the thinly-traded March contract which,
a day before expiry, managed to get to $7.00 3/4 a bushel.
The better-traded May lot topped out at $6.96 1/2 a bushel.
Whatever, neither contract could stay at their highest level
in more than four months for long, as the vertigo among commentators that
Agrimoney.com highlighted earlier over the concerns of Ukraine weather and US
cold came into play.
Sure, these fears are worth injecting risk premium for - but
"Ukraine tensions and dry conditions in the US hard red
winter wheat areas remain strong undercurrents in the world wheat markets," CHS
Hedging said, noting that "rain chances for the US hard red winter wheat areas
remain thin and scattered".
However, the broker also flagged that "US wheat basis
appeared generally weaker again today", thinking in particular of spring wheat
And as for Ukraine concerns, the US Department of
Agriculture attaché in Kiev "said that wheat crop prospects for the Ukraine
remain 'generally favourable' as fuel, fertilizer, seed and credit seem
Once selling set in, it somewhat snowballed, as the
technical signs which have played a big part in luring investors in turned negative.
Paris's May wheat contract was showing "an initial sign of a
potential blow-off", that is a rapid sell-off following a rapid rise, Jaime
Nolan Miralles at FCStone's Dublin office said, as the downward march gained
"Gapping higher on open this morning and trading a high of E216.00
a tonne before pulling back from its 50% retracement level of E216.32," a
Fibonacci point, it was good fodder for technical investors seeking an excuse
"Should we close out the session with a lower close to
yesterday's market, when coupled with the overbought nature of the market, this
may make room for bears/profit-taking to initiate a move to the downside and
fill the gap back down to E197.50 a tonne," Mr Nolan added.
In fact, Paris wheat for May closed down 1.0% at E213.50 a
tonne after, at E216.00 a tonne, hitting its highest in nearly a year.
Mr Nolan noted too an upgrade by FranceAgrimer to 3.17m
tonnes in its forecast for French wheat stocks at the close of 2013-14, and weak
wheat basis in Europe too, below average levels.
Chicago wheat did worse, dropping 1.5% to $6.73 3/4 a bushel
for May, and by 1.3% to $6.79 a bushel for the March contract.
US weekly export sales were viewed generally as fine, but
not fantastic, at In fact, down 14% week on week at 477,000 tonnes for old crop.
(European Union soft wheat export licences were also OK, but
not outstanding, at 571,000 tonnes. The USDA set a high bar in raising on
Monday its forecast for all EU wheat exports in 2013-14 to 29m tonnes.)
Warmth on its way
Weakness in wheat weighed on corn too, as did the prospect of warmer weather in the Corn Belt,
reducing concerns of low soil temperatures holding up spring plantings.
US Commodities noted forecasts that "cold temperatures will
be exiting the eastern Midwest by Friday and a pattern of seasonal temperatures
takes hold into March 23-24.
"Any real cold will be isolated to the far eastern Midwest."
While Allendale came in with a forecast for corn plantings a
little lower than that from some other commentators, it was still a
historically high figure, the fourth biggest since World War II.
Corn for May closed down 0.7% at $4.85 a bushel, but
remained above its 10-day moving average.
US old crop export sales at 683,400 tonnes were also viewed
as fine, if down 55% week on week.
It was all lining up then for a big drop in soybeans, especially when economic fears
over China, the top importer of the oilseed, are running high, after poor
industrial production and retail sales data.
The statistics "suggest that the Chinese slowdown could be a
bit faster than expected and GDP growth could possibly drop below the
government's 7.5% GDP growth target as soon as the first quarter", Danske Bank
Such fears sank shares, which fell 1.2% on Wall Street,
besides prompting a small fall in commodities overall, with China a huge buyer.
And soybeans appeared sure for a drop as talk mounted too of
cancellations of orders from Brazil, with knock-on effects for US prices.
'Trying to resell
"Rumours persist over China cancelling or trying to resell
soybeans from Brazil," US Commodities said, if adding that it had seen "no
"Brazil ports are seeing a shift to corn loading which
suggests the rumours may be true," the broker added.
Jefferies Bache flagged reports that "10 cargos, about
500,000 tonnes of Brazilian and Argentine purchases have been cancelled with
another 30 cargos likely to be delayed or cancelled".
Still half decent US export sales - a positive 113,500 tonnes
of old crop, when net cancellations are needed to meet the USDA forecast for
the full 2013-14 – eased jitters, even if there was a 81,800-tonne decrease down
On actual exports, China took 389,500 tonnes of US soybeans
'Concerns about export
And as an extra support, a ship carrying soybeans ran
aground in Argentina's main grains port, Rosario, slowing export from that
The news "has generated concerns about possible export
delays," Jefferies Bache said noting that Rosario handles roughly 80% of Argentina's
grain, oilseed, and biodiesel shipments.
Furthermore, the end of the wheat rally put a block on the
reversal of "long soybean, short wheat" bets too.
Soybeans for May added 0.7% to $13.96 1/4 a bushel, enough
to stay ahead of the20-day moving average, but not to regain the 10-day one.
Among soft commodities, coffee
and sugar had, for them, relatively
quiet days, even though the Brazil agriculture ministry declared a state of
emergency in Minas Gerais, the country's top coffee-growing state, because of
an outbreak of the borer beetle pest.
Arabica coffee for May closed up 0.3 at 205.95 cents a pound
in New York, where raw sugar for May gained 0.8% to 17.82 cents a pound,
recovering some ground lost earlier in the week.
It was cocoa
which fared better, adding 1.3% to £1,875 a tonne in London for May, and by 2.0%
to $3,006 a tonne in New York, both two-year closing highs, remaining underpinned
by concerns over consumption exceeding output.
"For the current 2013-14 season, the second deficit in a row
is predicted despite the fact that deliveries in West Africa proved
surprisingly positive," Commerzbank noted.