soared 4% as fresh tensions in Ukraine compounded concerns over dryness holding
back the US winter crop.
Monday had been awaited with some anticipation by investors
as it will bring, after the close of Chicago trading, the release of the first
US Department of Agriculture assessment on progress of US corn planting, which
has been slowed by cold and wet weather in the Midwest, particularly in eastern
Grain prices as of 09:45 Chicago time (03:45 UK time)
Kansas wheat: $7.49 ¾ a bushel, +4.1%
Chicago wheat: $6.84 ½ a bushel, +3.7%
Minneapolis wheat: $7.27 ¾ a bushel, +3.7%
Paris wheat: E214.00 a tonne, +2.0%
Chicago corn: $5.05 ¾ a bushel, +1.5%
London wheat: £169.40 a tonne, +1.4%
Chicago soybeans: $14.68 ½ a bushel, +0.4%
(Prices for May contracts)
Kiev has threatened military action if the protestors failed
to leave. However, Russia, which has a mass of troops in the east Ukraine
border, has urged Kiev not to use force.
But the data event was overshadowed in early deals by the revival
of concerns over the Ukraine crisis, after a deadline set by Kiev for pro-Russian
activists to leave government buildings they are occupying in eastern Ukraine
expired at 07:00 UK time (01:00 Chicago time).
With the assistant UN secretary general warning that Ukraine
"teeters on the brink", the impact on grain markets, and in particular wheat,
The Black Sea region is a huge source of wheat exports, with Ukraine the
third-ranked corn exporter too, and
there are concerns that the turmoil could affect production this year, as
farmers are starved of credit, besides the threat of logistical hiccups and
At Commonwealth Bank of Australia, Luke Mathews said: "This
comes after Ukrainian security forces battled pro-Russian gunmen in the eastern
Ukrainian town of Slovyansk over recent days.
"An escalation of the violence, and/or the implementation of
more severe sanctions on Russia, has the potential to trigger a bout of
financial market risk aversion.
Paris-based consultancy with a Ukraine office, said: "This week, markets should
be focused on Ukraine.
strong, which creates new worries about shipping concerns and 2014 crop
At Phillip Futures, Vanessa Tan said: "Renewed tensions
between Russia and Ukraine sparked off another round of concerns regarding
wheat output in Ukraine.
"Furthermore, forecasts were released, reflecting possible
further cold weather conditions in the US Plains", where drought has hurt the
health of winter wheat seedlings.
"This would further worsen the conditions of the winter
wheat crop which has already been experiencing declining crop ratings."
The USDA will release its latest winter wheat condition rating
later today, with the corn planting progress figure.
But weather has not been too favourable. While there was
rain over the weekend in some southern Plains areas that need it, "amounts were
0.10-0.50 inches", said weather service MDA, hardly a soaking.
It was cold too, with "snow amounts in western Nebraska, and
Colorado 1-4 inches".
And there is more to come.
MDA noted that "cold temperatures tomorrow and Tuesday
morning may result in some spotty damage to late-jointing or early-heading
wheat in southwest Kansas, western Oklahoma and west Texas".
And as for precipitation prospects, the six-to-10 day
outlook "is drier versus Friday's outlook", the US-based weather service said.
As an extra prop for prices, Taiwan purchased 92,550 tonnes
of US wheat, in another sign of demand in the market after Egypt's
230,000-tonne order on Friday.
Indeed, Egypt's purchase is looking well-timed but, in being
purchased solely from the Black Sea region, including Ukraine for the first
time in three months, not entirely risk free.
Wheat for May stood up 3.6% at $6.77 a bushel in Chicago as
of 09:45 UK time (03:45 Chicago time), having touched $6.89 ½ a bushel earlier.
Kansas City hard red winter wheat for May was up 2.7% at
$7.39 ¼ a bushel.
'Planting progress is
Corn gained too,
although less so, standing 1.0% higher at $5.03 ¼ a bushel for May, with
attention more focused on the USDA planting progress data due later.
"Weather and corn planting progress is key," US Commodities
said, quoting expectations that the data will show 4% of corn has been planted,
compared with about 5% typically by now, although another survey quotes a
figure of just under 3%, compared with an average of 7%.
Whatever, the outlook was hardly mega positive for farmers,
with MDA noting that "scattered showers and cool temperatures will stall
fieldwork this week" in the Midwest.
"Rain and snow showers, mostly rain, will favour southern and
eastern crop areas this week," of up to 1.25 inches of rain and 3 inches of
snow, MDA said.
In the Corn Belt, it is in the western areas, not the eastern
ones, which actually need rain.
New crop December corn added 0.8% to $5.03 a bushel.
Soybeans vs corn
That was enough to make ground over new crop November soybeans, which added just 0.3% to
$12.16 ¼ a bushel.
That reduced the soybean: corn ratio, viewed as a key
indicator of which crop farmers will lean to in spring sowings programmes, to
below 2.42:1, if a figure still in the oilseed's favour.
(The neutral ratio is generally reckoned at about 2.0-2.25:1,
depending on who you speak to.)
Benson Quinn Commodities noted, on the demand side that
while "the western [US] processor is said to have extended ownership this week
on uptick in producer selling with Wednesday's contract rally highs, the
eastern processor remains a firm bidder on tight pipelines".
Of course, the market remains overshadowed by the concerns
over Chinese defaults on import orders.
But at least palm oil,
another oilseed of which China is also a big buyer, eased some concerns in
rising 1.2% to 2,647 ringgit a tonne in Kuala Lumpur, helped by improved
Malaysian exports for the first 10 days of the month.
Among soft commodities, arabica
coffee suffered a little more profit-taking, shedding 0.6% to 200.10 cents
a pound in New York for May delivery and by the same to 202.30 cents a pound
for July, encouraged by the prospect of rains for Brazil's main
coffee-producing state, Minas Gerais, where drought has badly hurt trees.
This week a band of rain will bring precipitation of 1-2.5
inches to areas including the southern third of Minas Gerais, WxRisk.com said.
It will then move this weekend into northern Minas Gerais,
although "the data clearly shows these rains weakening significantly", the
weather service said.
New York cotton gained
0.8% for July to 91.19 cents a pound despite the threat to world economic
prospects from the Ukraine crisis, besides soft recent economic data from
China, the top producer, importer and consumer of the fibre.
"Cotton markets remain susceptible to any further bearish
economic news emanating from China or the eurozone, or any risk aversion caused
by Black Sea tensions," CBA's Luke Mathews said, adding that "record Indian
cotton production and strong exports will maintain pressure on global values.
"Nonetheless, US cotton futures should continue to draw some
support from the catastrophically tight US cotton balance sheet."
The USDA last week cut its estimate for domestic year-end stocks
to a 23-year low of 2.5m bales.