Investors hoping that the long weekend in the US might have
rebooted the rally in grains were disappointed, at least in early deals.
The decisive victory by Petro Poroshenko in Ukraine's elections
was seen as removing some risk in terms of tensions in the major corn and wheat
exporting nation, although hostilities continued at Donetsk airport.
And weather was another reason to remove risk premium from grain
The most high profile weather improvement has been in the US
southern Plains, where rains have arrived in some force to counter long-running
Over the weekend, parts of Kansas, Nebraska, Oklahoma and
Texas received broadly 0.25-1.5 inches of rain, but up to 3.5 inches locally,
And there is more to come, with showers expected to "linger"
in eastern Texas and south eastern Oklahoma, returning to eastern Kansas on Thursday,
and to more northerly areas next weekend.
There was talk of rains of up to 3 inches overnight in
Rainfall is perceived as good news for winter grain crops,
at least stabilising their poor condition, as well as for spring sowings, in
providing soil moisture.
Indeed, on the latter score, new crop cotton for December tumbled by 1.1% to 78.63 cents a pound in New
York as of 08:30 UK time (03:30 New York time, 02:30 Chicago time), falling below
its 200-day moving average, and hit 78.40 cents a pound earlier, the contract's
lowest since early March.
The better-traded July contract dropped 0.6% to 85.77 cents
a pound, also falling beneath its 200-day moving average.
Drought in Texas, the top US cotton growing state, has been seen
as threatening some 2m bales in production.
Russian rainfall too
For wheat, the US
rain, besides easing Ukraine tensions, were not the only reasons to sell, with
weather also improving in Russia, where dryness has also been raising concerns.
"Rains should increase in Central Region, northern North
Caucasus and western Volga Valley," MDA said.
Similarly, the forecast has turned wetter for eastern
Australia, where a dearth of rainfall has undermined expectations for autumn
Furthermore, there have been some ideas of thin demand, and with
the US seen as out of the money on what tenders are put out.
"The uncompetitive US stance in the export market can't be ignored,"
Brian Henry at Benson Quinn Commodities said.
"Outside of covering shorts ahead of a modest recovery, it's
difficult to find a reason to bid the wheat market."
Wheat for July fell 1.0% to $6.46 a bushel in Chicago,
dropping below its 100-day moving average to the lowest level since mid-March,
and taking aim at a 13th negative session out of 14.
Kansas City hard red winter wheat, the type under threat
from US southern Plains drought, actually fell a relatively modest 0.7% to
$7.40 a bushel.
Minneapolis hard red spring wheat dropped 0.9% to $7.22 ½ a
bushel, with this market being undermined by drier weather in its northern US
growing area, encouraging a pick-up in the pace of plantings after a slow
'Moisture for crop
This has been the case for corn too, with a slow early pace in its northern range contrasting
with strong progress in the core Corn Belt.
And rainfall looks like continuing to favour key Corn Belt
areas, where it is wanted to water crops already in the ground, rather than the
Rain in eastern and southern areas of the Midwest "will
maintain moisture for crop growth", MDA said.
And, again, with easing Ukraine tensions working against the
grain, Chicago futures for July dropped 1.1% to $4.73 a bushel, just above its
200-day moving average.
The new crop December contract fell 1.1% to $4.70 a bushel.
That was, for once, better than the new crop November soybean contract, which dropped 1.2% to
$12.50 ½ a bushel, amid talk of active producer selling, by farmers in Brazil
as well as the US.
Data later are expected to show strong progress in US soybean
plantings, reaching 55-60% complete, compared with 33% a week ago.
Dalian soybeans for January hardly helped by easing 5 yuan a
tonne to 4,555 yuan a tonne, although the results from the latest auction from Chinese
state reserves showed continued firm demand, with 81.5% sold, at an average price
of 4,145 yuan a tonne.
That was down from the 4,283 yuan a tonne the previous week,
but well above initial expectations.
Chicago soybeans for July were 0.8% lower at $15.03 a
The weak soy complex added to the pressure on palm oil, already suffering from waning
expectations for Malaysian exports, which dropped 0.4% to 2,499 ringgit a tonne
in Kuala Lumpur.