Corn, cotton and wheat futures looked set for their lowest closes in nearly three
months as improvements in the US weather curtailed further fears for slow
spring crop sowings, and for drought damage to winter grains.
Corn for December closed down 2.0% at $4.65 ¾ a bushel in Chicago,
its weakest finish since late February.
The decline reflected improved weather for sowings in the US
north, where wet and cold and slowed seedings of spring crops to a crawl.
"In the Northern Plains, the consensus is that the planting
pace was more aggressive late in the week than some had expected and those
areas should make additional progress before a round of rain moves in later in
the week," said Darrell Holaday at Country Futures.
Meanwhile, the core Midwest growing areas have had "ideal
conditions and will receive rain this week and next week on a timely basis".
At Citigroup, Sterling Smith said that "very favourable
weather conditions are being seen for planting and early development.
"The favourable weather should allow for further price
declines, until the next weather issue appears. However for the next 10 days
the weather reads bearish for prices."
Benson Quinn Commodities said: "There were some excessive rainfall
totals in the northern Plains over the weekend, but these totals were typically
confined to relatively small areas."
Investors are expecting official data later on Tuesday to
show US corn sowings some 85-89% completed, minimising the scope for lost acres,
or plantings completed into June, when yield potential accelerates a decline.
Meanwhile, technically, the contract, which has already
surrendered its major moving averages in a drop of some 9% from highs three weeks
ago, saw its appeal continuing to deteriorate, as it fell and held below a
March low of $4.71 ¼ a bushel.
"Once the December corn contract moved below $4.70 a bushel,
the market has found it difficult to find any buying," Mr Holaday said.
The best-traded old crop July contract had some reason for
support, with US weekly exports coming in strong.
"Weekly export inspections were reported with corn above estimates
at 1.16m tonnes," CHS Hedging said.
Furthermore, there are continued rumours of US officials
retreating somewhat in their plans for cutting the country's ethanol mandate, and raising the
guarantee for use of the biofuel, and thus the corn used in making it.
However, a rally in ethanol itself stalled, with the July
contract down 0.5% at $2.217 a gallon.
July corn ended 1.7% down at $4.69 ¾ a bushel.
potentials greatly improved'
In New York, cotton
futures also extended losses on improved sowing prospects – meaning rain this
time for the drought-hit southern Plains, and in particular Texas, the top US
growing state for the fibre.
"Rain fell abundantly across the southern US Plains during the
latter part of last week and into the long US holiday weekend," Commodity
Weather Group said.
"Impressive rain totals occurred across parts of Texas,"
with more than 6.0 inches in some cotton areas in the west of the state.
Ahead, "drier weather in west Texas over the next couple of
weeks will promote some needed drying - and then aggressive planting of cotton,
corn, sorghum and peanuts", the weather service added.
"Production potentials have been greatly improved by the
past week of rain."
'Ease severe crop stress'
At Price Futures, Jack Scoville said that the Panhandle
areas of northern Texas and western Oklahoma "are getting some rain that should
ease some severe crop stress in the region.
"It is likely that both dry land and irrigated crops will
get planted as quickly as possible," he said.
"It is now more possible for the US to have a good to very
good crop this year, although there is still the growing season in front that
will need to feature continued very good weather."
Cotton for July ended 1.5% down at 84.97 cents a pound, on
course for its lowest finish in nigh on four months, and closing back below its
200-day moving average too.
The new crop December lot closed down 2.0% at 77.86 cents a
pound, its lowest finish since late February, and also surrendering its 200-day
'Seen good progress'
Back in Chicago, wheat
dropped 1.8%, hurt both by the southern Plains rains, which have eased fears a
little for the drought-hit hard red winter wheat crop, and the northern US
dryness, which have eased doubts over sowings of spring wheat.
In fact, the weekly US Department of Agriculture crop progress
report due later on Tuesday is expected to show spring wheat 70% planted, up more than 20 points week on week.
"Despite some delays, expect to see good spring wheat
planting progress this week," Benson Quinn Commodities said, adding that the
pace of sowings had picked up north of the border too.
"Canada has also seen good progress with their problem area
being areas of Manitoba."
Certainly, all the fears for hard red winter wheat, the type
under threat from US southern Plains drought, have not disappeared, with
rainfall coming too late to save many crops.
"Rain totals in western Kansas were light, but these areas
have basically been written off at this point," Benson Quinn Commodities said,
And it was signal that Kansas City hard red winter wheat for
July dropped a relatively modest 0.4% to $7.40 ¼ a bushel, outperforming its Chicago
soft red winter wheat peer, the world benchmark, which is more prone to hedge
Indeed, Benson Quinn noted that in the last session, Chicago's
July contract surrendered its 100-day moving average.
"Expect this to get the attention of a fund community that
is coming to terms with the idea that they are long too much wheat."
In fact, Chicago wheat for July ended at $6.41 a bushel, its
weakest finish since early March, below its 100-day moving average and, as an
extra sign of weakened sentiment, showing a price gap between the top of its
trading range this session and the bottom of the last one, of nearly 3 cents.
Nor could soybeans,
the saviour for bulls in many sessions this month, come to the rescue this
time, with the idea of a strong US sowings pace undermining prices of the
"Favourable weather across the Midwest provided ample
opportunity for planting efforts," Citigroup's Sterling Smith said.
Indeed, in futures "the greatest weakness is largely being
seen in the new crop [contracts], as excellent progress was made last week, and
the forecasts are looking very favourable for development and fieldwork".
There is talk that soybean sowings could come in as high as 60%
finished in tonight's USDA crop progress report.
November soybeans tumbled 2.1% to $12.38 ¾ a bushel,
allowing the new crop soybean: corn ratio to erode a little to 2.66: 1.
'Good for harvesting'
Old crop July soybeans did a little bit better, but only a
little but, in falling 1.8% to $14.88 ¾ a bushel.
The decline was seen in part as technical, after the
contract failed to hold much-watched levels at $15.10 a bushel and $15.00 a
However, weekly US export data were soft too, at 89,000
tonnes, and influences from abroad not so helpful.
"Argentine soybean prices were weaker overnight on slowing
demand and weakness in US and China markets," CHS Hedging said.
"Argentine weather conditions are expected to be good for
harvesting soybeans this week," as Agrimoney.com has highlighted.
Back among soft commodities, raw sugar for July closed in New York down 1.0% at 17.02 cents a
pound, also a three-month closing low for the contract, dented by Brazilian production data which, while hardly upbeat, show improved output in the first
half of this month than in the second half of May.
And arabica coffee
renewed its slide, ending down 1.4% at 179.35 cents a pound for July delivery,
with drier weather in Brazil seen helping harvesting efforts, as it has done in
cane, and encouraging producer hedging.
"There were some rains that interfered with harvest efforts.
However, the weather is expected to turn drier as the week progresses,"
Citigroup's Sterling Smith said.