It was tricky for shares
to post much in the way of gains, with concerns growing over the latest batch
of Middle East unrest, this time over extremists who captured Iraqi towns such
as Mosul last week.
down 1.1% in Tokyo and opened a touch weaker in Europe too.
But for grains and oilseeds, the week began where it left
off the last one, reasonably positive, with the Middle East tension potentially
a more supportive factor price-wise.
Brian Henry at Benson Quinn Commodities noted that in the
last session "there may have been a wave of generalised, macro-related buying
due to increased geopolitical risk in the Middle East".
Recent years have shown a willingness by countries in the
region and North Africa to stock up on grains, particularly wheat, at times of political
difficulty, to ensure at least that food shortages do not add to reasons for
Jordan on Monday issued a tender for 100,000 tonnes of
wheat, optional origin, and the likes of Algeria and Egypt have been in the
As for the supply side, the US winter wheat harvest is still
being disrupted by rains.
Over the last week much of Kansas, as well as Nebraska, "saw
significant rains of 2-7 inches", WxRisk.com said, equivalent to 200-600% of
"Similar such rainfall amounts relative to normal be found
over much of the Texas panhandle north eastern Texas the southern half of Oklahoma
and large portions of Mississippi and Louisiana."
"Harvest continues to be delayed by widespread rain showers
in Texas, Oklahoma and Kansas," US Wheat Associates said in a harvest report
released late on Friday, adding that "between 30-40% of the Texas and Oklahoma
crop has been harvested".
'Fields are being
Furthermore, "fields are being abandoned in the many areas
of these two states affected by drought".
As for what is being reaped, "reported yields have improved
slightly as harvest moved northward and now generally range from 5-30 bushels
per acre (0.3-2.0 tonnes per hectare)," the group, which promotes US wheat, said.
The average is seen around 19 bushels per acre (1.3 tonnes
per hectare), which is hardly superb, as indeed has been expected after drought
for so much of the growing season.
"Producers continue to focus on harvesting seed wheat first
to insure that seed is available for next year's crop."
Still, largely drier weather is due this week, with rains in
the north, and west, of the US, but rains in the south
"South of Interstate-70, it's dry and hot over most of Kansas,
Oklahoma and all of Texas and the Deep South," WxRisk.com said.
Nonetheless, as an extra support to wheat, hedge funds have
got shot of their net long position in Chicago futures and options, notching up
a net short position of 27,135 contracts as of Tuesday last week, at least
likely limiting the extent of further short positions.
And there remain a few concerns over crops outside the US.
In France, the proportion of soft wheat rated "good" or "excellent"
dropped two points week on week to 72%, albeit still a strong rating, but with
Agritel noting that eastern France has for a month suffered a "water deficit".
For spring barley,
the "good" or "excellent" rating dropped 4 points to 67%, but harvest is
And there is the ongoing concern over Russia too, although weather
service MDA said that the Volga Valley region in focus over a dearth of
rainfall will receive showers, which "will ease dryness concerns".
Wheat for July gained 0.7% to $5.90 a bushel in Chicago as
of 09:30 UK time (03:30 Chicago time), with Kansas City hard red winter wheat
adding 0.7% to $7.18 a bushel.
That was one help to fellow grain corn, which added 0.5% to $4.49 ¼ a bushel in Chicago for July
delivery, although the new crop December lot managed a more modest 0.2% cent
gain to $4.48 ½ a bushel.
But there was also the support, or at least eased pressure,
of hedge funds having already sold off a stack of long positions in Chicago
futures and options, cutting their net long position below 150,000 contracts
for the first time since February.
Corn has been "quietly" trying to recover from "oversold"
conditions, Mr Henry added.
And there is the drier and hotter weather to factor in south
of Interstate 70 (although some would see that more in terms of boosting corn
growing prospects rather than as, at this stage, a reminder that the sensitive
pollination period has yet to happen).
New crop vs old
Soybeans showed a
bigger contrast between old crop and new crop, with the July contract adding
0.5% to $14.34 ¼ a bushel, while the November lot managed only a 0.5 cent gain
to $12.21 ¾ a bushel.
But then, that is a reflection of the differing fundamentals
for what is left of 2013-14, when limited supplies are available in the US, and
next season, when stocks should be swollen by a record harvest.
For now, Jerry Gidel at Rice Dairy recommended users to "cover
your July-August protein needs, basis $450 a short ton August soymeal area or below, since US protein
supplies will remain extremely tight until 2014's harvest".
Soymeal for July actually added 0.6% to $470.50 a short ton
As far as 2014-15 goes, however, Informa Economics cut on
Friday by 300,000 acres, to 81.78m acres, in its estimate for US soybean
sowings this year went the wrong way, many observers believe.
Downgrades of 150,000 acres to the estimate for Minnesota
soybean acres, and 200,000 acres in North Dakota, attracted particular
scepticism, since in these two states wet weather hampered badly sowings of
corn, which is earlier planted than soybeans.
Thus, corn seeding problems typically end up with some
switch in area to soybeans.
Benson Quinn Commodities reckoned that Informa was "low on
the bean acres", while noting others in the trade foreseeing a number as high
as 82.5m acres.