The kind of thing wheat needed to pull out of its sharp
decline, led by US markets, was that there were buyers at these price levels
And grain bulls got some reassurance after Egypt's Gasc
grain authority, a huge buyer, came out with a tender late on Thursday, for
June 20-30 shipment.
With Gasc already having bought some 2m tonnes domestically
since last month (albeit at the equivalent somewhere around $400 a tonne, far
higher than international values), and having tried to talk down its import
needs, that was a surprise to some.
Still, there is a downside to the Gasc tender, in that its
announcement later may clarify the premium that US wheat has to other origins,
a factor which has been key to this week's tumble, with prices appearing likely
to ration too much even supplies of drought-hit hard red winter wheat.
There is talk that even Black Sea wheat, renowned for
competitiveness, was not being snapped up.
Black Sea origination not being able to find new crop demand at cheaper values
is starting to ramp up," Brian Henry at Benson Quinn Commodities said.
And while the premium that European Union wheat has had over
Black Sea supplies "dropping, they haven't been able to secure new crop demand
'Good soil moisture'
Meanwhile, on the supply side, threats there appear to be
diminishing, with talk of rains next week for drought-hit crops in the western
US Plains (albeit that it looks like being too late for many areas).
Meanwhile, the Buenos Aires grains exchange upped by 200,000
hectares to 4.1m hectares its forecast for sowings in Argentina, representing quite
a revival from the 3.6m hectares sown last year.
"Good soil moisture, favourable prices and high availability
of seeds are among the variables we have noted," the exchange said.
Argentina has historically been a major wheat exporter, although
its fortunes have faded over the last couple of years as government-imposed export
restrictions prompted farmers to switch to alternative crops, notably barley.
'Dryness continues to
Meanwhile, India issued a reminded of its own bumper production,
saying that it expected to harvest a record 264.4m tonnes of grain in the year
ending next month, cutting the threat of spiralling food prices should the
prospective El Nino lead to a weak monsoon, as many fear.
Still, thinking of El Nino, which is also linked to dryness
in eastern Australia, MDA noted that recent rains there had not removed the
need for further soil moisture.
"Dryness continues to
build in northern New South Wales and Queensland," the weather service said.
While some rainfall is expected next week which "would
improve wheat conditions a bit, much more rain will still be needed to
sufficiently replenish moisture".
There was enough concern around at least to halt wheat's
decline, with the July contract standing up 0.1% at $6.79 a bushel in Chicago
as of 09:40 UK time (03:40 Chicago time), looking for its first close higher in eight sessions.
Kansas City hard red winter wheat, the type under threat
from US southern Plains drought, was unchanged at $7.78 ¾ a bushel.
Minneapolis hard red spring wheat, for which excessive rain
in the northern US has been a problem, slowing plantings, was 0.4% down at
$7.52 a bushel for July, with drier weather in its growing areas seen on the
As to what happens later in the day may depend on changes to
the weather outlook, or indeed sentiment among funds.
For fund selling has been seen as a big driver of the drop
in grain prices this week.
While in January, when funds stared buying agricultural
commodities, prices were significantly cheaper, and weather threats emerging, now
values are far higher at a time when some decent harvests are expected.
production is seen at record this year, and world soybean stocks expected to set an all-time high too, according to US
Department of Agriculture estimates.
For wheat, harvest time is approaching a period when, with
supplies ramped up, prices tend to sag.
"The staying power of the long fund community is being
questioned repeatedly," Benson Quinn Commodities said.
'Planting starting to
CHS Hedging noted that "long speculators left the market" with
talk of spring planting "starting to pick-up in the northern tier where we
needed dry weather the most".
And another broker noted the decline in the last session of 2.75
cents in the premium of old crop July corn over new crop December futures, and
of 11.5 cents between July soybeans and the new crop November contract, as
evidence of fund activity.
"While many are still trying to look for a fundamental
catalyst for market action, the most important thing to remember is who is
holding what positions," the broker said.
"We know that the speculators have been very long corn and
soybeans going into this planting season.
"We finally got a rather bearish Wasde report and have
caught up to the five-year average planting pace."
'Still have to get
The broker added that "we don't expect new crop corn to
"We still have to get through pollination before we are
comfortable assuming what the crop size will be."
And, indeed, corn for July managed a gain of 0.2% to $4.85 ¼
a bushel, with some suspicion of profit-taking among shorts for which this week
has been a good one, with prices down more than 4%, making it the grain's worst
week in 10 months.
There is, after all, a weekend ahead, and the potential for
a change to the weather outlook which could dash ideas of a northern farmers
playing catch-up with sowings at a key time, with the ideal sowing window
passed and prevent plant insurance dates approaching.
Among oilseeds, profit-taking appeared evident in Kuala
Lumpur palm oil too, although this
meant downward movement after gains this week on improved Malaysian exports.
Palm oil for August fell 1.1% to 2,586 ringgit a tonne.
But, back in Chicago, soybeans
managed small gains, adding 0.2% to $14.72 ½ a bushel for July delivery, struggling
for any kind of direction as investors balance off the thin supplies left over
from the last crop with prospects for imports from Brazil, against a backdrop
of a record US harvest expected for 2014.
This time, Dalian soybeans joined in the stasis too, easing
1 yuan to 4,338 yuan a tonne at the end of a strong week, boosted by strong
demand evident at an auction from state reserves on Wednesday.
Chicago's new crop November lot added 0.3% to $12.21 ¼ a
"November continues to trade $12.10-$12.30 a bushel," CHS
noted, adding that "a close below $12.00 a bushel would signal confidence in
the 3.635bn-bushel US production estimate" unveiled by the USDA last week.
Among soft commodities, Friday began with some profit-taking
in arabica coffee, which eased 0.7%
to 195.35 cents a pound in New York for July delivery, after its jump of 6% in the last session on a Brazilian crop downgrade for this year's harvest, and concerns over 2015 too.
Raw sugar for July
fell 0.3% to 18.15 cents a pound in New York, although it remains up more than
5% for the week, buoyed by downgraded 2014-15 supply talk coming from New York
sugar week from the likes of Platts Kingsman and the International Sugar
Cotton for July
added 0.2% to 90.57 cents a pound, shrugging off estimates from the China
Cotton Association of a 48% slump to 224,400 tonnes in Chinese imports last
This pace was in line with that already this year. Chinese
imports for the first four months of the year stand at 985,000 tonnes, down 45%
year on year.