PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 19:55 GMT, Thursday, 20th Apr 2017, by William Clarke
PM markets: wheat prices tumble on unthreatening US weather

Wheat futures fell further on Thursday, after an attempted rally collapsed in a wave of selling in the previous session, as speculators see no reason to give up short positions given an unthreatening outlook in the US Plains.

"Poor weekly export Sales—when compared with newswire estimates—set the tone in the grains and soybeans today; the clear leader to the downside once again today is the wheat," said Mike Zuzulo, at Global Commodity Analytics.

As a matter of fact, wheat actually came in toward the upper end of expectations in the weekly USDA export sales data, at 414,000 tonnes, while it was soybeans and corn which missed expectations.

But CRM AgriCommodities that the decent sales in wheat were "not enough to lend support to the US wheat complex with unthreatening weather outlook across the Plains".

Fresh selling in wheat

"Wheat has completely collapsed again," said Darrell Holaday, at Country Futures.

Mr Holaday said it was "hard to pinpoint the exact cause of the renewed weakness," but he pointed out that given the nearing expiry of the May contract, and given the nearing new-crop, "there could easily be a large amount of wheat delivered on the futures contracts".

May Chicago wheat futures finished down 3.0%, at $4.06 ¼ a bushel.

EU prices also down

Wheat prices in Paris also eased, despite weather uncertainty.

"Despite solid EU wheat exports relative to last year's poor harvest, Euronext wheat closed lower for a second consecutive day as the euro reached its highest in more than 3 weeks against the US Dollar, making the European origin less competitive on the export market," said CRM.

But it noted that weather risks remain. "North East France and Germany will experience below freezing temperatures tonight and tomorrow although greater risks lie in the persistent dry conditions observed across Western Europe," CRM said.

March Paris wheat futures finished down 0.6%, at E163.50.

Good harvesting weather in Argentina

Corn and soybeans came under additional pressure from the good weather outlook in South America.

"Dry weather has prevailed across most of the major corn and soybean areas in Argentina over the past week, with rains limited to northern Santa Fe and Entre Rios," said Kyle Taply, at MDA Weather Services.

"The dry weather in most areas has allowed wetness to ease across La Pampa and Buenos Aires and has also allowed corn and soybean harvesting to make much better progress," Mr Tapley said.

"The dry weather should continue through Saturday. Scattered and mostly light showers are expected Sunday through Tuesday, but dry weather will return for the middle and end of next week."

"The below normal rainfall in the major growing areas of Argentina over the next 10 days should allow wetness to ease further and will allow corn and soybean harvesting to progress well."

Brazilian conditions improve

Conditions are also improving in Brazil, with rain expected to increase conditions for the second-crop corn harvest.

"Showers will favor all of the safrinha corn belt today and tomorrow, improving conditions for development of the crop, although the rains will not completely replenish soil moisture in central and eastern Mato Grosso and northern Goias," said Mr Tapley.

"Drier weather will return to most of Brazil this weekend, but another round of rainfall is expected next Tuesday through Thursday, which should favour again benefit the safrinha corn crop," he said. "Temperatures should remain favourable for the crop as well."

May corn futures finished down 1.1%, at $3.57 ¾ a bushel.

Farmers hold onto beans

But soybeans remain supported by slow farmers selling in Brazil.

"What has supported soybeans on recent price breaks is that the South American producer quits moving cash product on price breaks," said Mr Holaday.

"There will be many that will hold on pricing and wait for a problem in the US crop."

May soybean futures finished down 0.4%, at $9.46 ¾ a bushel.

Cocoa finds new decade-lows

Cocoa extended its rapid sell-off, in a wave of technical selling, to new nine-and-a-half-year lows, with little supportive on the fundamental side either.

"The production this year could be a record in Ivory Coast and is above last year in Ghana," said Jack Scoville, at Price Futures group.

"Both countries are experiencing moderate weather as rains have returned."

"The demand remains a question, with everyone expecting continued weaker demand in Europe," Mr Scoville said.

"Ideas are that the US demand might be somewhat improved, but no one has real confidence in those ideas."

July New York cocoa settled down 4.0%, at $1,799 a tonne.

Arabica tumbles further

Coffee futures also found new recent lows, on chart-based selling.

July arabica futures settled down 4.5%, at 134.30 cents a pound, after falling to 133.85 cents.

The falling arabica price will discourage roasters to start ramping robusta use back up.

"This once again narrowing arbitrage is now becoming less of an attractive factor for the many price sensitive roast and ground roasters who have considered robusta coffees to be an opportunist discount component, within their mostly arabica coffee blends," said trade house I&M Smith.

July robusta settled down 2.3%, at $2,124 a tonne.

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