New month, new money?
There is an idea that the start of a month sees funds inject
fresh cash, just as they tend to withdraw funds at month end.
However, there was little sign of that on the first trading
day of June.
In fact, early deals were marked by some landmark price
Weakness in Asia
In Asia, rubber
dropped 3.6% to touch 191.50 yen a kilogramme in Tokyo, the weakest for a benchmark
contract since August 2009.
Prices are being undermined by strong inventories in China,
whose easing rate of economic growth is only adding to ideas that these stocks
may take some time to work through.
Meanwhile, production is still growing, if with signs of a
marked slowdown. World rubber output will exceed demand by 241,000 tonnes in
2014, a fourth year of oversupply, according to the International Rubber Study
In Kuala Lumpur, palm
oil dropped too, touching 2,386 ringgit a tonne, a seven month low, before
recovering some ground to stand at 2,397 ringgit a tonne at 09:40 UK time (03:40
Chicago time), down 1.1% on the day.
The vegetable oil was undermined by data underlining a weak
performance by Malaysian exports in the second half of May.
Malaysian palm shipments rose 7.8% overall last month, cargo
surveyor Intertek said. But that implied a sharp slowdown later in May, given the
23% rate of increase reported half way through the month.
Sticking in Asia, concerns about the appetite for soybeans by China, the top importer of the oilseed, were hardly helpful to prices in Chicago either.
"There is chatter that some Chinese firms run into credit
problems and there are continuing reports that vessels loading in Brazil have
no destination yet established," CHS Hedging said.
Benson Quinn Commodities said: "China crusher woes continue
with spot margins negative and the small crusher unable to get credit on Brazilian
Furthermore, there are ideas that China may at this week's
auction of soybeans from state reserves put a bigger volume up for sale.
Weakness in palm oil is hardly helpful to soy complex prices
either, with the vegetable oil a major competitor to soyoil.
And, elsewhere in the oilseeds complex, Strategie Grains
nudged its forecast for the European Union rapeseed
crop, the world's biggest, higher by 200,000 tonnes to 21.8m tonnes, citing
In Paris, November rapeseed was indicated down 0.4% at
E353.00 a tonne.
Paris-based Agritel said that an "abundant European harvest
outlook, progress sowing canola in
Canada and weak palm oil prices do not support the rapeseed market".
Still, Chicago soybeans themselves did worse, falling 0.6%
to $14.83 ¾ a bushel for the July contract, and by 0.9% to $12.23 a bushel for
the new crop November contract.
Also pitching again soybean bulls is favourable weather for US
"Weather remains near ideal for the already-planted crop as
warmer temperatures and ample moisture allows for rapid emergence," CHS Hedging
And traders believe some 80% of US soybeans have been sown, although
the US Department of Agriculture will later reveal the weekly official update
As for old crop, Benson Quinn Commodities noted that US cash
markets are "indicating there are still soybeans available".
The market will, in quarterly stocks data at the end of this
month, "be looking for signal that USDA may have understated production last
year", the broker said.
For corn too, the
favourable US conditions have been giving power to bearish sentiment.
Indeed, speculators cut their net long position in Chicago corn
futures and options by more than 29,000 contracts in the week to last Tuesday.
The USDA data is expected to show corn sowings 95% complete,
with crop seen in good health too.
CHS Hedging said: "The first crop condition report is
expected to show the crop in good condition."
"The rating could be at or above 70% 'good' or
'excellent', indicating an above-average start to the 2014 US growing
season," Richard Feltes at RJ O'Brien said.
'Very wet looking
And there are expectations of further precipitation too to
keep growth on track, with US farmers saying that, generally, "rain makes grain".
WxRisk.com said that a ridge centred "over the northern
portions of Mexico, Texas and Louisiana" would provoke "ring of fire
thunderstorms" about that, with a ridge over western Canada encouraging US rains
"Either one of these features by itself would bring about
significant rain to much of the Plains and the Midwest," the weather service
"But when you combine these two features in the overall
weather pattern, you end up getting a very wet looking pattern."
Corn for July was 0.9% down at $4.61 ¾ a bushel, with the
new crop December lot down 0.9% at $4.53 ½ a bushel.
'Rush to plant'
The one concern over this wetness is whether it will slow the
last remaining plantings in the northern US, where growers have been behind.
CHS noted that late last week, "farmers across North Dakota [rushed]
to seed wheat ahead of a possible
major precipitation event with some areas forecast to see up to 5 inches".
Rain could also slow the harvest of winter wheat, which is
in its early stages in the US south, the hard red winter wheat belt, besides
presenting a quality threat, with harvest-time rains encouraging sprouting
which reduces kernel's suitability for making flour.
US harvest results
In fact, the rains that fell on the southern Plains last
week, while boding well for crops not yet ripe, did hamper harvesting, although
there has been no talk yet of any quality damage.
US Wheat Associates, in its second harvest report of the
year, said that last week "the 2014 hard red winter wheat harvest is moving at
an extremely slow pace with only limited cutting in central and north Texas and
extreme southern Oklahoma being reported, due to widespread precipitation.
"Scattered rain showers have continued through the week."
On quality, "preliminary" reports from show test weights "mostly
between" 57-59 pounds a bushel, equivalent to 75.0-77.6 kilogrammes per
Moisture is seen averaging just over 12% with protein readings
ranging from 11% to more than 175, "with the majority being 12.5-13.5%".
Still, with harvest typically a time when crop prices fall,
as a ramp up in supplies gives buyers a little extra market power, Kansas City hard
red winter wheat for July stood down 1.6% at $7.11 ¾ a bushel, earlier touching
a three-month low of $7.11 ¾ a bushel.
The contract also dropped easily below its 100-day moving
Chicago soft red winter wheat for July fell 1.5% to $6.18 a
bushel, touching a three-month low of $6.16 ¼ a bushel earlier.
The soft red winter wheat harvest has yet to begin, with the
long winter slowing development.
"Arkansas harvesting likely will not begin until the end of
the first week of June," US Wheat Associates said, adding that "North Carolina
anticipates starting about June 9, and both states could be further delayed if
Minneapolis hard red spring wheat for July was 1.3% down at
$6.97 ½ a bushel, falling below $7.00 a bushel for the first time since early
At least on the demand front there as some positive news, in
that Jordan issued a tender for 100,000 tonnes of hard milling wheat, plus
100,000 tonnes of feed barley, although the country does have a habit of tendering
and not buying.
For wheat, today marks the first trading day of 2014-15 for
the US calendar, although for many other northern hemisphere countries the
season will start on July 1.