The Crimea crisis may have disappeared to the "other news"
sections on many websites, but it remains very much a headline topic in
agricultural commodity markets.
It was viewed as one of the two main causes of a jump of
3.6% to $6.63 ¾ a bushel in Chicago wheat for May, which earlier rose above its
200-day moving average for the first time in 13 months, and of a rise in corn
"Once again, the Ukrainian situation is providing underlying
support for corn and wheat," Darrell Holaday at Country Futures said.
"This situation still makes the market nervous," he said, if
adding that "there is no indication that it will change overall world
'Export activity still
Sure, Ukraine grain shipments seem to be continuing OK for
"Export activity is still dynamic despite the current
turmoil in Ukraine," Agritel said, noting that last week Ukraine shipped
480,000 tonnes of corn, with Russia shipping 165,000 tonnes.
And Ukraine's agriculture minister, Ihor Shvaika, lifted by
500,000 tonnes to a record 33m tonnes the official forecast for the country's
grain exports this season, up from 22.8m tonnes in 2012-13.
This despite a small fall, of 100,000 tonnes month on month to
2.5m tonnes, in shipments expected this month (as might be expected with the marketing
year getting long in the tooth).
Slow start to sowings
But that does not mean that shipments will continue for ever
uninterrupted, or that buyers may prefer to opt for origins deemed of lower risk,
such as the nearby European Union, which the US Department of Agriculture on Monday
forecast will ship a record 29.0m tonnes of wheat in 2013-14, an upgrade of
The election this weekend on Crimea's potential secession
from Ukraine, to join Russia, could act as a potential flashpoint for unrest.
Besides, not all Ukraine agriculture ministry data were so
positive, with spring seedings so far, albeit still early days, at 46,600
hectares, compared with more than 300,000 hectares last year, and a warning
that Crimea (which produced 765,000 tonnes of grains last year) may go mainly
In a further hint of a potentially difficult sowing season, DuPont,
the owner of the Pioneer seeds group, overnight cautioned that its earnings
prospects for this year were being "challenged" in part by the situation in Ukraine,
where it has built a new $40m seeds plant.
'Chances of rain look
DuPont also highlighted that it was being challenged by a
second main factor supporting grains prices, as in the extended and cold winter.
For wheat, this means potentially hiccups to spring sowings
from snow melt, which tends to flood large areas of the northern spring wheat
belt, although it was actually dryness, and the potential impact on winter
wheat seedlings further south, which was more concerning investors on Tuesday.
"The chances of rain look limited for winter wheat growing
regions into the 10 day forecast," CHS Hedging said.
At RJ O'Brien, Richard Feltes said that "the overall US hard
red winter wheat belt precipitation outlook remains worrisome", this type being
grown mainly in the central and southern Plains.
'Drought conditions holding
In fact, the news on this score was not all so bad, with the
condition of the Texas winter wheat crop making a remarkable recovery to stand
28% rated "good" or "excellent" by USDA scouts, up from 15% the week before.
For Kansas, the rating improved by two points to 37% good or
excellent, but Oklahoma's reading dived to 22% from 31%.
'Drought conditions are holding steady," USDA scouts in Oklahoma
said, adding that "temperatures were unseasonably cold this past week".
A bit of reversal of "buy soybean, sell wheat" spreading
supported wheat too in Chicago.
Still, Kansas City wheat for May gained 0.8% to $7.27 a
bushel, well above its 200-day moving average and the best close for a
nearest-but-one contract in four months.
Paris wheat for May gained 1.6% to E210.25 a tonne, its
highest finish in nearly 10 months.
supported by the tensions in Ukraine too, with the country the third-ranked
exporter of the grain, and by US weather, but on a different angle, over the
extended cold meaning cold soils and delaying plantings.
RJ O'Brien's Richard Feltes noted forecasts that "75% of
days over the next two weeks will post below-normal Midwest temperatures",
doing few favours for getting frost out of the ground.
Furthermore, corn received a small short-term price upgrade
from Goldman Sachs, albeit to levels below the futures curve.
Chicago corn for May closed up 1.1% at $4.83 ¼ a bushel.
Although the Rosario grains exchange raised its forecast for
the Argentine corn crop by 700,000 tonnes, at 22.7m tonnes, the estimate
remained below the USDA estimate of 24.0m tonnes.
Conversely, the Rosario exchange cut its forecast for the Argentine
soybean crop by 300,000 tonnes to
54.7m tonnes, getting towards the USDA figure of 54.0m tonnes.
But this was of small beer on a day when fears over the
economy China, the top importer of the oilseed, were uppermost in investors'
viewed as particularly sensitive to sentiment on China, fell 2% to $6,470 a
tonne, its lowest since July 2010.
Sure, Goldman Sachs raised its estimate for soybean futures
too, but to levels below the futures curve, and while Oil World offered upbeat
comment, markets were more absorbed on the talk of Chinese buyers cancelling
orders of the oilseed from Brazil.
"Trade is awaiting confirmation of rumoured Chinese washouts
of Brazilian purchases which are said to be upwards of 15-20 cargoes," Benson Quinn
"Rumours yesterday had China cancelling up to 15 cargoes of
soybeans out of Brazil. When and will they cancel US purchases due to the back
up of soybeans in China's ports? US Commodities asked.
Another factor that traders are looking at is the potential
for Brazilian soybean prices to make imports to the US work although, with values
there too relatively elevated, as Cepea noted, that dynamic will not work for
"Mathematically importing South American soybeans into the
US still does not pencil, but traders will watch that spread closely moving
forward with ample supplies in the southern hemisphere and our domestic
pipeline running dry," US-based CHS Hedging said.
Chicago soybeans for May eased 0.4% to $14.13 a bushel.
Among soft commodities, sugar dropped, amid concerns over
whether high prices are doing too much in the way of deterring buyers, besides boosting
Raw sugar for May
closed down 1.0% at 18.03 cents a pound in New York, with May white sugar ending down 1.5% at $471.00
a tonne in London.
But arabica coffee
maintained its upswing, with demand fears not such an issue, and certainly not
a match for the worries over the impact of continued heat and dryness on Brazilian
New York's May contract gained 1.1% to 205.65 cents a pound,
after earlier hitting a two-year high of 208.90 cents a pound.