Morning markets: Sluggish start amid Iraq jitters

Grain prices have again eased overnight as markets shrugged off the implications to Russia's ban on ag imports from many Western countries, instead focusing on the further weakness in broader financial markets.


Equities markets overnight slipped deeper into the red as US President Barack Obama authorized air strikes on targets in Iraq, negating the impact of stronger trade figures from China. 

At the time of writing the Nikkei 225 index stood down 3% while the Hang Seng was off 0.2%.


China reported a trade surplus of $47.3bn, above the $26bn forecast as exports jumped 14.5% from the previous month, reflecting the stronger economic figures from the country recently amid signs the mini-stimulus measures announced in April are helping quicken growth back to the official 2014 target of 7.5%.


Australia harvest weighs wheat

Chicago wheat futures for September delivery, stood down 0.1% overnight trade at $5.60 per bushel compared with Thursdays closing level of $5.61 a bushel.


Reports the current wheat crop in Australia is set for an early harvest has done little to improve to bearish outlook at present, adding to strong supplies globally this year.


The National Australia Bank's latest Commodities Wrap forecast global wheat production this year to total 705.2m tonnes, the second highest on record.


"Crop conditions are exceeding expectations in several of the key wheat states," stated Gail Martell of Martell Crop Projections.


Favourable weather conditions have seen expectations for Australia's wheat harvest improve from previous forecasts.  In June Australia's Department of Agriculture ABARES department forecast the wheat harvest would be some 9% down from the previous year.


"Wheat potential is rather favorable in Western Australia," noted stated Gail Martell, although cautioned, "drought in New South Wales would weigh on the wheat outlook."


"ideal weather" overhangs corn

Corn has added to the weaker outlook for wheat, with Chicago futures for December delivery down 0.2% in overnight trade, at $3.70 a bushel.


Wheat is "weak on its own merits and is tethered to the very weak corn," said Sterling Smith of Citigroup.


"Corn prices have been under significant pressure in the last three months, as ideal weather fuelled predictions of a record yield and possibly a record crop," noted John Clemmow of Barclays. 


Brazil's Conab crop bureau yesterday raised its estimate for the 2013-14 corn harvest(s) by 355,000 tonnes to 78.55m tonnes


In addition the latest figures showed US corn export sales were soft at 758,000 tonnes for 2014-15, below hopes for at least 800,000 tonnes.


Soybean important weather "still ahead"

Soybeans have seen similar price sentiment overnight with Chicago futures for November off 0.2% from Thursdays closing level at $10.76 a bushel.


By contrast soybean futures for January delivery edged higher on the DaLian Commodity Exchange Friday, to stand up 0.4% at RMB 4,547 a tonne near the close.


The outlook for soybeans remains somewhat mixed in the near term, particularly as "The most important weather for the soybean crop is still ahead of us," noted Citigroup's Sterling Smith.


Mr Smith believes, "August soybeans will be able to hold a premium above the new crop," but noted, "The larger than expected stocks situation combined with available imports should keep bullish ideas tethered to the weather".


Citigroup forecast November futures to hold "a range of $10.45 to $11.45".




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