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Evening markets: wheat prices tumble as US rain hopes grow

Wheat prices tumbled as hopes for rains eased concerns over drought-hit winter wheat seedlings in the US, more than offsetting support from continuing jitters over Ukraine, a major grains exporter.

Precipitation over the weekend for crops in the dry southern Plains, where hard red winter wheat is grown, actually turned out less than impressive.

"A few showers return to the south western Plains, but amounts and coverage there was quite limited," said Don Keeney at weather service MDA.

"Thus, no significant improvements in wheat conditions were noted."

(In fact, latest official data on crop condition are expected later on Monday.)

'More notable rains'

However, the weather service flagged expectations for "more notable rains" in parts of Kansas and Nebraska midweek.

At broker Country Futures, Darrell Holaday said that "weather models continue to put moisture in the hard red winter wheat area in the next week, through next Tuesday, and that has pressured wheat from the run up that occurred last week".

Benson Quinn Commodities noted that "additionally, drier regions in the EU and Black Sea regions have seen some beneficial moisture".

Jefferies Bachesaid that a "recent increase in shower activity has helped to ease stress to winter and spring grains in Ukraine".

And, on the demand side, weekly US wheat exports, as measured by cargo inspections, were a little soft too last week, at 495,250 tonnes, down from 712,227 tonnes the previous week.

'Fading upward momentum'

Wheat tumbled 3.3% to $6.68 a bushel in Chicago for May delivery, and by 3.4% to $6.75 a bushel for the better-traded July contract.

A willingness by funds to take profits was also seen as playing a part, after their return in April to lowering their net long position in Chicago and Kansas City wheat, after a two month spree of more bullish positioning.

The market has, technically, "struggled with fading upward momentum and a lack of fundamental support", Benson Quinn Commodities said.

'Premium is being pulling out'

Nor did it help that fellow grain corn was in poor form, dropping 1.3% to $4.93 a bushel in Chicago for July delivery, undermined itself by weather factors, with conditions for sowings seen improving.

"Expectations of favourable conditions through the next five days for much of the Corn Belt offered resistance to the corn market," Benson Quinn Commodities said.

"The trade is looking for corn planting to meet 10-12% on this afternoon's crop progress report. It seems the trade has a goal of 40% by the end of April."

Mr Holaday said: "Corn planting has started at a rapid pace in Illinois and Indiana and we expect it to continue through the end of the week.

"Some planting delay premium is being pulling out of the market."

The improved planting hopes were more than a match for a boost from solid weekly US exports, at 1.60m tonnes last week, up from 1.48m tonnes the week before.

China problems

Soybeans lost ground too, undermined by further concerns over demand from China, the top importer of the oilseed.

RJ O'Brien said it was "hearing more reports of Chinese soy cargos unable to load, as buyers are unable to open letters of credit, which is pressurising basis as soybeans back up in ports".

US Commodities also flagged "more reports of Chinese soy cargoes unable to load".

Meanwhile, weekly US exports continued to decline, hitting 138,777 tonnes, down from 268,429 tonnes the week before.

Soybeans for July dropped 1.0% to $14.87 a bushel.

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