The tensions over Ukraine eased.
And that is pretty much all wheat investors needed to know,
sending prices back into retreat in early deals on Monday.
That is not to say that there is not a large risk of an
revival in the Ukraine crisis. Ukraine forces over the weekend accelerated
operations against pro-separatist rebels, who show down a Ukraine fighter jet.
However, foreign ministers of Ukraine, Russia, Germany and
France made progress on Sunday, in talks in Berlin, on measures to alleviate
the humanitarian crisis and bring about a ceasefire.
With Russia and Ukraine both major exporters of competitively-priced wheat, the wheat market has been something of a barometer of regional tensions.
'Signs of vomitoxin'
That is not to say that all news is bearish.
On the demand side, Jordan tendered for 100,000 tonnes of
hard wheat, and the same amount of barley.
And the weather is not ideal for the early stages of the US spring
wheat harvest, seen some 15% completed, with MDA noting that, in the northern
Plains, "active rains this week will stall wheat drydown and harvesting and
will lower quality a bit".
This at a time when vomitoxin, a toxic fungal residue whose
presence is encouraged by damp problems, is already seen as a potential issue,
after hitting some soft red winter wheat too.
"Early spring wheat test cuttings in parts of North Dakota,"
the top spring wheat growing state, "are showing signs of scab and vomitoxin,"
broker CHS Hedging said.
Quality fears are already a factor in crops in the European Union and, to a lesser extent, in Russia too.
But another factor against price rises is the reduced
pressure on hedge funds to cover short positions, with their net short position
down to a more comfortable 61,000 contracts as of Tuesday last week.
While still historically high, it is nearly 12,000 below
levels two weeks ago which tested the record, and raised questions over whether
hedge funds' appetite for short positions was spent.
Chicago soft red winter wheat for September fell 1.0% to $5.45
¾ a bushel as of 09:30 Uk time (03:30 Chicago time), dropping back below 10-day
and 40-day moving averages.
Kansas City hard red winter wheat - less of a playground for
speculators, and which benefited less from last week's Ukraine tensions - fell
a more modest 0.7% to $6.15 ½ a bushel for September.
'Does raise eyebrows'
For US corn and soybean crops, the weather was more
"Rains in north western and north eastern areas this week
will improve moisture and ease stress on soybean growth," MDA said.
At Benson Quinn Commodities noted, soybean crops in "south eastern
Minnesota, eastern Iowa and north west Illinois are in need of a drink".
But MDA said that "the 6-10 day outlook is drier in north eastern
areas, and cooler in all areas", moving into a period when coolness is not such
a positive thing.
After all, crops in some areas are lacking a little in
growing degree days, ie growth energy, and there is the next crop danger on the
horizon in the threat of an early frost.
In Iowa, Mike Mawdsley noted that early on Friday, "temperatures
overnight were a bit cool in Great Lakes area as one spot in Indiana showed 39
"No frost/freeze is on the horizon but it does raise
eyebrows when reading those numbers in August."
That said, markets are likely to receive a reminder of huge
yield potential for US crops this week as the ProFarmer tour of the Midwest
kicks off, sending one bunch of scouts down from Sioux Falls, South Dakota, and
another further south and east in Colombus, Ohio, with the two heading for
Rochester Minnesota on Thursday.
The tour looks like being a Tweet-fest of market moving
But for now, soybeans for November were 0.4% higher at $10.55
¾ a bushel, continuing to feel a little uplift from Friday's
stronger-than-expected US soybean crush data.
The statistics showed smaller-than-expected soyoil stocks too, at 1.59bn pounds
below forecasts of 1.69bn pounds.
December soyoil added 0.1% to 33.24 cents a pound, although the
positive feeling did not extend to rival vegetable oil palm oil, which for October dropped 0.1% to 2,088 ringgit a tonne
in Kuala Lumpur, hitting earlier 2,083 ringgit a tonne, the lowest for a
benchmark contract since October 2009.
Corn gained too, up 0.4% at $3.78 ½ a bushel for December delivery,
setting sights for a sixth successive position session.
There was some further positive weather news for the grain
from China, where "weekend rainfall was slightly below expectations" for the
country's corn, and soybean, belt, MDA said.
Crop fortunes in China, the second-ranked corn producer and
consumer, are coming closer under scrutiny, although there is no thought yet of
Indeed, "rains in southern north east China in the 6-10 day
period would finally improve moisture for corn and soybean late growth," MDA
Among soft commodities, cotton
for December dropped 0.6% to 63.97 cents a pound in New York, retreating after
failing to break through its 20-day moving average, at 64.75 cents a pound, in
"Cotton is under mild pressure is light volume as the market
is forming resistance at the 65.00 cents a pound," said Sterling Smith at
"The bearish fundamentals will keep the market from having
That said, China Cotton Association data showed Chinese
cotton imports down 17% year on year at 280,003 tonnes last month – not quite
the bearish figure that it appears given that traders are braced for a large
drop in volumes this year.
And the volumes were actually up 28% month on month.