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Pre-holiday trade bad for corn. But wheat, robusta rise

Just as in the last session, pre-holiday short-covering foundered in late deals, leaving a broadly negative feel to trading in grain and oilseed markets.

There was one exception, wheat, which managed to close higher, in all three major US markets, and managed to at least hold its ground in Paris too.

Sure, short covering may have been an aid to Chicago soft red winter wheat, in which hedge funds have a large net short position, and in which the closure of short Chicago-long Kansas City hard red winter wheat bets has been a big factor.

'Turned wetter'

But there were some other factors too, including a turn wetter in the weather outlook for many North American growing regions, including in southern Plains areas, where rains are slowing the harvest and threatening quality.

"The GFS model turned wetter for the last half of next week in the morning run," Darrell Holaday at Country Futures said.

"That period had been dry in the western Midwest and Plains in the in the GFS most of this week after a dry period from now through next Tuesday.

"But the morning run has introduced moisture in that region for the July 8-10 period."

World Weather said: "US hard red winter wheat country will receive less frequent and less significant rainfall for a while, but showers will still occur across the region."

'Interfered with planting'

Meanwhile, talking spring wheat, rains are being viewed as an increasing threat to Canada's crop, with talk of large insurance payouts on flooded fields.

"Persistent heavy rainfall has interfered with wheat planting in the Canadian prairies, pointing to a potentially sharp cut in the area to be harvested," said Gail Martell at Martell Crop Projections, foreseeing a potential 15% drop in sowings, compared with the 7% fall expected by Statistics Canada.

 "Wheat plantings are likely to be much smaller than expected, due to excessively wet weather in Saskatchewan, the leading Canadian wheat province."

Prices rise

Back on winter wheat, Informa added late support by estimating the US crop at 1.369bn bushels, 12m bushels below the US Department of Agriculture figure.

And the USDA itself revealed better-than-expected export sales data, of 567,500 tonnes, including a largeish order from Brazil a hard red winter wheat buyer which has started 2014-15 too in unusually strong form.

Kansas City hard red winter wheat ended up 0.8% at $6.87 a bushel, actually recovering some premium over Chicago soft red winter wheat, which ended up 0.7% at $6.79 a bushel.

Minneapolis spring wheat for December gained 1.0% to $6.82 a bushel.

In Paris, wheat ended at E184.25 a tonne for a third successive session, showing some sign of stability, if at a nine-month low, amid talk of producer selling drying up at these lower levels.

Informa downgrade

Informa had some positive data for corn too, in lowering its estimate for the US harvest by 35m bushels to 13.731bn bushels, more than 200m bushels below the USDA forecast.

While Informa lifted its yield estimate by 1.5 bushels per acre to 165 bushels per acre, just behind the USDA figure of 165.3 bushels per acre, the area forecast was lowered.

And US export sales were decent too, at 290,700 tonnes of old crop and 474,700 tonnes of new crop, above most market forecasts.

And the USDA announced the sale of a further 176,000 tonnes of new crop corn to Egypt too.

'Unable to identify any bullish catalyst'

Still, there was enough negative sentiment around about benign US weather to keep bears on top.

"Traders unable to identify any bullish catalyst next week if updated forecasts are realised," Richard Feltes at RJ O'Brien said.

While extra US rains will add to flooding concerns in some areas, overall they are seen as helpful, on the "rain makes grain" adage.

"Unlike recent years, no-one is discussing the possibility of the USDA cutting US corn and soybean yield forecasts on the July Wasde crop report a week from tomorrow," Mr Feltes said.

Corn for December ended down 0.7% at $4.15 a bushel, a fresh contract closing low, while the September contract ended down 0.7% at $4.09 a bushel, the lowest finish for a nearest-but-one contract in nearly four years.

Beans drop

Soybeans suffered too, despite OK export sales at 40,600 tonnes for old crop and 431,200 tonnes for new.

And, also on the bullish side, Argentine port workers at Rosario are to begin a strike today of indefinite duration to protest for higher wages.

Still, the Informa revisions were not so positive, in upgrading the US soybean crop to 3.7bn bushels from 3.591bn bushels, reflecting a switch in area in wet regions from corn, which has an earlier planting window.

The upgrade took Informa above the USDA, which pegs the crop at 3.635bn bushels - although the latter is more upbeat on yield, at 45.2 bushels per acre, compared with an Informa estimate held at 44.5 bushels per acre.

And CHS Hedging noted that CME Group raised margins on soymeal futures, effective after the close today.

Soybeans for November ended down 0.7% at $11.33 a bushel, with the old crop August lot ending down 1.1% at $12.99 a bushel, ending below $13 a bushel for the first time since February.

Soymeal for December closed down 0.2% at $360.20 a short ton.

'Monsoon has revived'

Among soft commodities, the prevailing trend was broadly lower too, with cocoa futures easing 0.2% to £1,927 a tonne in London, little helped by Barry Callebaut's backing for ideas of a world production surplus in 2013-14, rather than the deficit which had been expected.

Raw sugar futures ended down 0.4% at 19.21 cents a pound for October delivery, with the latest news on India's monsoon, which ED&F Man highlighted as crucial for the price outlook, turning more positive.

"The monsoon has revived in many parts of central and north India," said BP Yadav, head of the National Weather Forecasting Centre at the India Meteorological Department.

However, robusta coffee remained notably strong, adding 1.0% to $2,068 a tonne in London for September, its best finish in six weeks, amid talk of a large drawdown on stocks held for delivery against Liffe futures.

"Robusta purchases now represent approximately 75% of Liffe stocks in the first three days of July," according to commodities analyst Mark Nucera, a long-time robusta coffee bull.

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