One of the main agricultural commodity losers of the last
session, wheat, turned into one of
the biggest winners this time, as grain market selling focused on soybeans.
In part, fresh forecasts of European Union rain, after a dry
spell heading to the weekend, helped, in reviving concerns over the quality of
the harvest from the top wheat producer, which was meant to have taken the
title of top exporter in 2014-15 from the US too.
Darrell Holaday at US broker Country Futures flagged "some rain
creeping back into the European forecast, which could delay harvest again",
more importantly raising the prospect of further downgrades of milling wheat to
This when Germany's DBV producers' group highlighted the
importance of dry weather for a domestic crop, which has become increasingly important for EU fortunes overall.
In Paris, wheat for November added 0.3% to E175.50 a tonne,
after earlier hitting a fresh four-year low, for a spot contract, of E174.25 a
"Concerns about the quality of the EU crop remain in focus
as frequent rain events delay harvest and cause sprout damage in a few areas,"
Benson Quinn Commodities said.
However, Chicago contracts also got some support from export
business, with Nigeria buying 175,500 tonnes of US wheat for the current
season, and a further 30,000 for 2015-16.
And while Russia scooped a clean sweep at the latest wheat tender by Gasc, that may not be quite the negative for other origins as it
US wheat was the cheapest, excluding shipping.
And traders may be accelerating sales of Russian wheat ahead
of the enactment of European and US sanctions, billed as the toughest against
Russia since the end of the cold war,
The measures include a bar on state-owned banks, including
Agricultural Bank, from issuing shares or bonds in the West, which has raised
ideas of difficulties in financing Russian trade deals.
'Fired up over sanctions'
At Linn Group, Roy Huckabay said that the wheat market "is
fired up over the sanctions against Russia".
CHS Hedging said: "Sanctions could make exporting their
wheat harder. Sanctions make it hard for the Russian Ag Bank to be involved in
any international trade.
Short term, "this could also encourage traders to liquidate
their positions in Russian wheat and sell that wheat before the sanctions take
In Chicago, soft red winter wheat for September closed up 1.4%
at $5.27 ¼ a bushel.
Kansas City hard red winter wheat for September ended up a
more modest 0.9% at $6.16 ¾ a bushel, lowering its premium, as a higher protein
wheat, below $0.90 a bushel despite the quality problems in rival shipper the
The spread in "this area does look like a buying opportunity",
said Sterling Smith at Citigroup.
As an extra boost to this argument, most of the sale to
Nigeria was of hard red winter wheat, and there is some talk of poor sowings of
the grain in Argentina, a major wheat source for Brazil, a big hard wheat
however, had continued benign US weather to deal with, as the crop builds in
its sensitive pod-setting period.
"The models continue to suggest that the north west flow will
move to more of a zonal flow next week," Country Futures' Darrell Holaday said.
"This will lead to slightly warmer temperatures in the
middle part of the country but also increase moisture."
Benson Quinn Commodities said: "Forecasts continue to offer
better rain potential in western and north western regions of the Corn Belt
into next week.
"Additionally, rains are also expected to impact eastern
regions and could offer benefit to southern regions of key corn and soybean
producing areas into the end of next week."
Linn Group's Roy Huckabay said that rains forecast for late Sunday
"We are forecasting for pretty good rains from Wyoming to
the Atlantic seaboard," useful when crops have been showing some, small, signs
of requiring moisture.
"These are $1m rains for beans and corn," he told Agrimoney.com,
adding that they were likely to determine the direction of markets early next
week, depending on how they turned out.
Soybean futures closed down 1.2% at $10.81 ¼ a bushel.
As for corn, it
managed small gains, adding 0.5 cents to $3.71 ½ a bushel for December, helped
by the strength in wheat, but also by data showing another bumper week for US ethanol output (even if producers could be profiting more if the distillers'
grains market was stronger).
Output, at 954,000 barrels a day last week, was down 5,000
barrels a day on the previous week, but still the fifth best result ever.
"Weekly ethanol production was solid. You could certainly
make a case that corn used for ethanol for the current crop year will be
increased 15m bushels in the USDA's August Wasde report numbers, Mr Holaday
A caution by Ukraine's Hydromet weather forecasting centre
of a potential drop of 6%, to 29m tonnes, in the country's corn harvest, thanks
to conflict, was not actually so supportive, given that UkrAgroConsult on Tuesday
pegged the crop at 27.0m tonnes – an upgrade of 1.5m tonnes.
Among soft commodities,
arabica coffee had another decent data, adding 1.0% to 182.50 cents a pound
for in New York for September delivery, its best close in two months.
The contract also touched its 75-day moving average for the
first time since May, but failed to break through it.
Prices are being supported by increasing confidence in ideas
that the early-year drought really did cause crop damage, an observation that
some early talk had questioned.
"The reports from the ground are showing a remarkable
consistency of beans being small and malformed, and with a greater number of
beans needed to fill the bag," Citigroup's Sterling Smith said.
Cooxupe, Brazil's biggest coffee co-operative, on Tuesday
pegged its output at 4.1m bags, down from a pre-drought forecast of 6m bags.
"The appearance of the beans is worse, they're deformed, and
smaller and lighter," said Carlos Paulino da Costa, the Cooxupe president.
Coffee exporter Terra Forte this evening, after the market
closed, cut its forecast for Brazilian output to 45.8m bags, from a February
estimate of 47.4m bags.
'Near-term sugar glut'
New York raw sugar
managed a gain of just 0.1 cents to 16.63 cents a pound for October delivery.
But that represented something of a victory for bulls after
the contract earlier touched a five-month low of 16.52 cents a pound.
"The stats/technical indicators are now all showing buy
signals, but at the moment they are falling on deaf ears from the
trade/physical players as we continue to hear about a near-term sugar glut,"
Thomas Kujawa, co-head of the softs desk at Sucden Financial said earlier.
The decreased chance of an El Nino, as highlighted by New Britain Palm Oil, was also a negative, in being linked to rains which would
slow the Brazilian cane harvest, and dryness to set back Indian production.