The fears over the former Soviet Union spurred by Russia's
ban on ag imports from many Western countries failed to find fresh traction on
Thursday, prompting retreats in many markets.
Wheat has become
the barometer for fears over the Ukraine crisis, and broader regional unease, given
the status of both Ukraine and Russia as major exporters of the grain, although
a touch of unease over short positions was cited in many ag markets in the last
But jitters eased as President Vladimir Putin's decree of
bans on ag imports from the likes of the European Union and the US, which have
placed sanctions on Russia for its role in the Ukraine, failed to spur fresh fears
of disruptions in food supplies.
Politics, as well as weather, can be a big spur of crop
price rises, as Russian bans on grain exports in previous years have shown.
Nor were there increased signs of Russian invasion of
'More interested in
In fact, the market's current view is that "Putin more
interested in bluffing/intimidating Ukraine than invading" the country, Richard
Feltes at Chicago broker RJ O'Brien said.
At Citigroup, Sterling Smith said: "The most current upside
does look to be exhausted, and short term break does look to be in order."
Wheat futures dropped in Chicago by 0.7% to $5.64 ¼ a bushel,
for September delivery, as of 11:30 Chicago time (17:30 UK time) on course for
their first drop in seven sessions, albeit with the quality concerns over
Europe's crop maintaining a support.
In Paris, wheat dropped 0.8% to E176.75 a tonne for November,
albeit with the good news for all investors that Socomac and Senalia, which
operate the two silos for delivery against Matif contracts, have agreed on
updated quality requirements.
Both operators will apply a figure of 220 seconds for
Hagberg falling number, with tolerance to 170 seconds, with a standard of 10.5%
While hardly tight, coming amid a poor quality French
harvest, these specifications at least mean that Paris investors now know what
they are playing with.
It was hardly a help for wheat futures that US export sales
last week, at 591,000 tonnes, were a touch shy of expectations for at least
For corn, export
sales were soft too, at 758,000 tonnes for 2014-15, below hopes for at least
And, with the US weather outlook remaining benign and wheat,
the market leader of late, faltering, corn futures for December were 1.3% lower
at $3.69 ½ a bushel.
Brazil's Conab crop bureau raised its estimate for the 2013-14
corn harvest(s) by 355,000 tonnes to 78.55m tonnes.
Conab trimmed its estimate for 2013-14 production to 85.66m tonnes, from 86.27m
tonnes, and further below the US Department of Agriculture estimate of 87.5m
And US export sales for the oilseed were not so bad, at 1.0m
tonnes for 2014-15, at the top end of market forecasts.
export sales, 252,000 tonnes for 2013-14 and 479,000 tonnes for next season,
were well ahead of traders' forecasts, and viewed as a fresh sign of the doubts
among buyers of importing from Argentina, the top exporter of soy products.
Argentina farmers are seen as upping stockpiling in the face
of the uncertainty provoked by Argentine default on bond payments to hedge
funds, with crops representing a dollar-denominated hedge against falls in the peso.
'Million dollar rains'
And old crop soy contracts managed gains, with August
soybeans adding 0.4% to $12.42 a bushel, and soymeal for August up 0.4% at
$389.40 a short ton.
But new crop contracts struggled with high expectations for
the forthcoming US soy crop.
"Some 'million dollar' rains have been observed across parts
of the Midwest with more to come," CHS Hedging said, the "million dollar" bit a
reference to the importance of this moisture in keeping yield ideas high.
"Forecasts continue to look favourable for August rains
across many sections of the Grain Belt."
And for areas which "have been missed to date, chances in
the 6-10 day window look optimistic according to the latest US and European
Soybeans for November were 0.7% lower at $10.73 a bushel.
Among soft commodities, cotton
for December eased 0.4% to 64.07 cents a pound in New York, after US weekly
export sales of 251,000 running bales, OK but hardly outstanding.
Raw sugar for
October dropped 1.2% to 16.12 cents a pound.
Sure, there has been some physical buying to cheer bulls,
with Sucden Financial noting "further rumours of sizeable purchases by Chinese
refineries over the past week of both Brazil and Thai sugar".
However, is the buying sustainable, especially if prices
The level of "16 cents a pound has obviously proved to be
supportive in the past few sessions and seems to be the area attracting
physical buying. Whether this continues is debateable," Sucden said.
Indeed, ED&F Man flagged the need for the near-term
contract to increase its discount against the March 2015 lot to attract demand.
But arabica coffee
fared worst, tumbling 3.1% to 184.90 cents a pound for September, amid ideas
that buyers had covered what they were willing to at elevated prices.
At Price Futures, Jack Scoville noted that while "some
selling from producers" has been noted, and that there remains a "lot more" to
be done, "the buy side of the market is offering weak differentials as they
have already bought some coffee".
Furthermore, weather has turned dry again in Brazil's coffee
belt, a blessing in that at least it reduces the threat of further premature
flowering of trees, ahead of the 2015 harvest.