Wheat prices in the
Chicago and Paris saw early gains, helped by fears that time is running out for
much needed rains in Europe and North Africa, but the rallies failed later in the
day, as a strong forecast was issued for Argentine production next season.
Investors are starting to get jumpy about European and North
"Markets are getting nervous regarding EU moisture with
risks of crop damage should it continue through May," said CRM AgriCommodities.
"Rainfall across western Europe is at 30% of normal levels
in places which is causing concern for both spring plantings and winter crops,"
"Prospects for Rainfall across UK/ France and Spain over
next 10 days remain limited, with Germany forecast relief within the next 6-10 days."
North African dryness
There are similar concerns in North Africa, Kyle Tapley at
MDA Weather Services.
"Rainfall has been well below normal across the wheat areas
in North Africa over the past several weeks," Mr Tapley said.
"The dryness is most significant across Morocco and western
Algeria, where it has not rained for nearly a month."
"This dryness is leading to notable stress on the wheat crop
in these areas," Mr Tapley said. "Even
in eastern Algeria and Tunisia, where it has not been as dry, some crop stress is
"Light showers are expected by the weekend, but Mr Tapley
said the rain "should lead to only minor improvements for wheat".
Heavy stocks weigh
But the rally failed to hold, under pressure from heavy
Prices were pressured by a recovering dollar, which is
bearish for export prospects, as well as a forecast for rising wheat production
The Buenos Aires Grains Exchange forecast that Argentine
farmers will plant 5.5m hectares with wheat and harvest 17.5m tonnes, compared
with 16.3m tonnes in the previous season.
May wheat futures in Paris finished down 0.2% on the day, at
E165.25 a tonne.
May Chicago wheat futures finished down 0.8%, at $4.19 a
US corn sowing
outlook still mixed
Corn markets are
still weighing up the effect of a wet weather system moving across the US Midwest,
and its potential effect on already-lagging corn sowings.
"Showers will spread across the Midwest today and tomorrow,
preventing any significant corn planting progress," said Kyle Tapley, at MDA
But Mr Tapley noted that "drier weather is expected across
Nebraska, Iowa, northern Illinois, and northern Indiana for Friday through the
middle of next week, providing a five-day stretch of favourable planting
weather in the heart of the corn belt, which should allow corn planting to make
good progress during that time".
"Elsewhere, however, the outlook is less rosy for planting
efforts," Mr Tapley said.
"Temperatures will briefly turn colder this weekend in the
Midwest, but should rebound next week, favoring germination of crops," he said.
Big ethanol stocks
eased, as the US Energy Information Administration reported weekly ethanol
stocks up by 131,000 barrels, to 23.03m barrels.
Ethanol output was reported up 7,000 barrels per day, to
131,000 barrels per day.
Ethanol futures were down 0.4%, at $1.6 a gallon.
May corn futures finished the day unchanged, at $3.61 ¾ a
Chinese import hopes
prices were supported by hopes of higher Chinese imports.
"China have cut the VAT rate on agricultural products by 2%
to 11% which is expected to support soybean imports and supported prices in
this afternoon's trade," said CRM.
May soybean futures finished up 0.4%, at $9.46 a bushel.
Technical selling in
markets saw a rapid technical sell-off late in the day, after the best-traded
July contract fell back below the 50-day day moving average, which it passed
for the first time in nearly two months last session.
July arabica coffee futures settled down 3.4%, at 140.65 cents
July robusta futures
settled down 0.7%, at $2,174 a tonne.
And cocoa prices
in New York also fell sharply, hitting their lowest price in nearly a decade,
after breaking through recent lows.
Markets are waiting for North American grind data out on
Thursday, which may show consumption remaining sluggish despite lower prices.
July New York cocoa settled down 2.2%, at $1,873 a tonne, a
nine-and-a-half year low.