Russia went a little way to tackling its reputation for
stirring up trouble as president Vladimir Putin called for a ceasefire in
eastern Ukraine following the Malaysia Airlines tragedy.
But what was good news for Ukrainians was a setback for wheat
markets, as the reduced likelihood of disruptions to Black Sea grain exports
returned focus onto exactly how much Russia especially has to ship.
Earlier this week, the country's farm ministry and
consultancies Ikar and SovEcon raised their estimates for the Russian grains
harvest, of which a bit over half is usually wheat, to a combined range of
92m-100m tonnes or more.
'Wal Mart of the
"Russia now staring at a 55m- 56m tonne wheat crop and
really need to get it sold," Darrell Holaday at Country Futures said.
"They are definitely the 'Wal Mart of the world wheat market'
in that they will discount the price in order to get it moved as they are way
behind on sales."
The country is behind on pricing wheat exports "because of several
factors," Mr Holaday added.
"But the most significant is the fact that the crop is about
5m tonnes larger than they anticipated 60 days ago."
The impact on wheat markets of the focus on Russia as a
grain discounter, rather than agent provocateur, was dramatic.
September wheat in Chicago gave back all the gains of the last
session, on the airline crash, and more to close down 3.4% at $5.32 ¼ a bushel.
Not that Russia was the only negative to prices, with a turn
drier in the US weather seen speeding the winter wheat harvest.
Traders see the harvest as coming in on Monday's weekly US
Department of Agriculture crop progress report as at least 80% complete, up
from 69% last time.
And as for demand, there was a purchase by Iraq of 100,000
tonnes of wheat.
But it was of Canadian and Russian origin and, besides,
100,000 tonnes is not a huge amount for Iraqi orders. Its previous three orders
this year were for 150,000 tonnes, 200,000 tonnes and 350,000 tonnes.
The Paris, the November milling wheat contract did marginally
better in ending down a more modest 2.1% at E179.25 a tonne, not quite giving
up all the last session's gains.
But then, there are growing, if not severe, concerns over
the quality of the EU harvest, with harvest time rains seen prompting unusually
large downgrades to feed in a range of countries, including France itself.
And more moisture is on its way.
Agritel reported that farmers are "accelerating the harvest
to avoid the rains that are forecast for the weekend in those areas where
quality is already arousing concerns".
Of course, more downgraded wheat means more feed grain, and
it was little surprise to see London feed wheat underperform a touch, ending
down 2.3% at £129.00 a tonne, just £0.20 from matching a four-year closing low
for a spot contract.
Wheat's weakness undermined fellow grain corn too, as did the weather outlook,
with the midday run of the GFS weather model turning towards the cooler and
wetter picture offered by the European model.
"Reasons to be overly concerned about production are few,"
Benson Quinn Commodities said.
Indeed, Richard Feltes at RJ O'Brien forecast that Monday's
weekly USDA crop progress report would show domestic corn rated at least in
line with the 76% good or excellent reading last time, and potentially show a 1
"Evidence is mounting that the US corn yield will be at or
above 170 bushels per acre," compared with the 165.3 bushels per acre, already
a record, that the USDA is forecasting.
December corn ended down 2.3% at $3.78 ½ a bushel
Big export orders
too, for similar thinking as corn, although some large US export orders did
slow the decline, leaving the November contract down 0.8% at $10.85 ¼ a bushel.
The old crop August lot edged 0.2% higher to $11.77 a
The USDA announced the sale of a further 116,000 tonnes of
soybeans to China for 2014-15, plus 464,000 tonnes to "unknown destinations",
capping off a week of strong order volumes.
"The soybean market, despite negative 2014-15 US and global
supply and demand, is unlikely to retest recent lows until the torrid sales
pace slows and the market has more confidence about the likely August weather
pattern," Mr Feltes said.
August is a key month for US soybeans, bringing the sensitive
There were strong gainers among ags, but in New York, where arabica coffee for September soared
5.2% to 172.40 cents a pound amid fresh concerns over the Brazilian harvest.
Cepea, the Brazilian research institute, said it would be "difficult"
for exports in 2014-15 to beat those of last season both thanks to the "expected
volume for the current crop", undermined by drought, and the fact that much of
this year's harvest may not make the grade.
"Another aspect that might limit shipments in 2014-15 is
quality," the institute said.
"Agents surveyed by Cepea say that first batches harvested
in this season have been presenting a high amount of small coffee beans."
The contract gained extra kudos too on technical factors,
slipping back easily above its 10-day and 20-day moving averages.
Cocoa got a hand
from Asian grinding data showing a 5.2% increase year on year, to 161,805 tonnes,
in the April-to-June period, following North American data overnight showing an
increase of 4.5% to 131,737 tonnes for the quarter, beating forecasts for a 3%
Still, some profit-taking was seen as behind a relatively
small gains on the day, with September cocoa futures adding 0.6% in New York to
end at $3,082 a tonne, and 0.7% in London to close at £1,930 a tonne.