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PM markets: wheat tumbles as rain heads for Plains

Grain futures saw some early strength on the news that speculators were massive net sellers in grains over the week to last Tuesday.

This was seen as supportive for prices, as it means that there will now be more gas in the tank for future rallies.

But Tregg Cronin, at Halo Commodities, suggested that the complex has "probably watched some buying come back in since".

And wheat markets came under pressure, as weather prospects in the US Plains improves, with hard red winter wheat futures in Kansas City leading the market down.

Moisture needed in the Plains

Dryness in the US Plains has been a major factor underpinning grain markets, as the winter wheat crop has only limited time to receive moisture, before spring development starts to be affected.

"Very little precipitation has fallen across the west central Plains over the past two months and the continued above normal temperatures are accelerating drying of soils," said Kyle Tapley at MDA Weather Commodities.

But Mr Tapley said "cooler weather should spread across the region tomorrow and showers are expected to develop on Thursday and Friday, particularly in northeastern Colorado and Nebraska".

"Above normal precipitation is expected across most of the central U.S. in the 6-10 day period," Mr Tapley said.

"A timely weather system is expected to arrive this week and provide relief to the HRW crop across the Great Plains," said CHS, although it noted that "coverage may be spotty".

And weather worries are also easing for the next Australian crop.

"Forecasts of rain in Australia are expected to relieve soil moisture concerns ahead of plantings, whilst Aussie wheat exports are currently at a record pace following a 35m tonnes harvest," CRM said.

Strong wheat exports, but prices still tumble

The hopes for much needed moisture weighed on wheat prices, despite some good export inspection data.

Weekly US export inspections for wheat came in at 624,000 tonnes, ahead of the estimated range of 350,000-550,000 tonnes.

Prices for hard red winter wheat, the variety primarily grown the US Plains, saw the sharpest fall.

May Kansas City wheat futures finished down 1.9%. $4.45 a bushel.

May Chicago wheat futures finished down 1.5%, at $4.29 a bushel, breaking back below the 100-day moving average.

South American pressure still in place

Wheat led other grains lower, with prospects still good in Argentina, while the Brazilian harvest continues apace.

"Weather in South America remains favourable for growing crops in Argentina," said Paul Georgy, at Allendale.

Mr Georgy noted expectations of "some rain to delay harvest," in areas of Brazil, "but nothing which would damage crops".

Agro Consult forecast the Brazilian soybean crop at 111m tonnes, 3m tonne higher than the latest USDA forecast.

Big soybean export inspections

Weekly US corn export inspections came in in-line with expectations, at 1.33m tonnes, in line with expectations.

May corn futures finished down 1.2%, at $3.63 a bushel, back below the 100-day moving average.

Soybean futures fared a little better, as export inspections came in at 737,000 tonnes, ahead of expectations.

May soybean futures finished down 0.2%, at $9.98 a bushel.

Cocoa futures soar

Cocoa futures soared, punching back through the 50-day moving average, to put in the biggest single-day gain for the front-month contract in year.

"Both New York and London are showing signs that a bottom has been made and that prices can move higher over time," noted Jack Scoville, at Price Future Group, early in the day.

Prices got some impetus from reports that hot and dry weather in parts of Cote D'Ivoire, which could threaten the mid-crop.

May New York cocoa settled up 5.1%, at $2,116 a tonne, near a six-and-a-half-week high.

Cotton eases

The Chinese government announced that it will only revise its target price for cotton in the top-growing region of Xinjiang once every year.

The government had previously been lowering the price on a yearly basis, effectively cutting farmer incomes and discouraging plantings.

China has announced that it will set its target price for cotton in (the country's largest growing region) every three years.

"The latest changes suggest China's government has perhaps reached a level of output they are satisfied with," suggested Tobin Gorey, at Commonwealth Bank of Australia.

May cotton futures settled down 1.3%, at 77.33 cents a pound, after putting in the strongest close since June 2014 on Friday.

Sugar tumbles back down

The sugar rollercoaster continues, as May raw futures once again broke back below the 18-cent level, triggering another wave of selling.

But unlike on Friday, when stop-losses were triggered on the same signal, no buying emerged to push prices back up again.

May raw sugar futures settled down 2.6%, at 17.70 cents a pound.

"The funds 'smell' money on the short term on the short," suggested Tom Kujawa at Sucden Financial.

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