PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:32 GMT, Wednesday, 11th Jan 2017, by William Clarke
Precipitation in US Plains sends wheat futures tumbling

Markets may be strapped in for Thursday's US Department of Agriculture, but that doesn't mean they've taken their eyes off the weather.

US wheat futures tumbled, under pressure from easing dryness fears in the Plains.

Snow and rain are headed from the country's main hard red winter wheat growing area.

"We have talked about the moisture that was going to move into the southern Plains since Monday," said Darrell Holaday at Country Futures.

"The market today is finally reacting to the weather forecasts," Mr Holaday said.

"The moisture is still expected to be very significant for a large part of the hard red winter wheat belt."

March Chicago wheat futures settled down 2.1%, at $4.18 a bushel.

And in Kansas City, March hard red winter wheat futures settled down 1.7%, at $4.30 a bushel.

Tight spring wheat supplies

But spring wheat futures in Minneapolis are holding stronger, thanks to good demand for the high-protein variety.

"The strong export pull is finally having an effect on the domestic market as everyone from traditional importers of spring wheat to one-off destinations such as Egypt and Venezuela head to the US for hard red spring wheat futures," said Tregg Cronin, at Halo Commodities.

"Add in more rumoured demand to China, and the fact Canadian logistics and port supplies of spec-meeting wheat are woefully inadequate, and you have the current structure of the spring wheat market," Mr Cronin said.

March Minneapolis wheat futures settled down 0.3%, $5.59 a bushel.

Tariffs confirmed

Soybean futures finished down, as the bearish world supply situation outweighed support from a shift in Chinese tariff policy.

The Chinese government will impose a 42.2-53.7% anti-dumping tax, and an 11.2-12.0% anti-subsidy tax, on US dried distiller's grain imports.

Kim Rugel, at Benson Quinn Commodities, said the market took the news as bullish for soybeans.

"With China DDG imports on a rapid decline and only a nominal 61,575 tonnes in November, this increase in combined duties to an average of 59.5% was seen bullish beans on increased Chinese domestic meal demand".

With lower DDG imports, Chinese feed mills will have to turn to domestically crushed soymeal, encouraging bean imports.

Upgrade to Brazilian prospects

But markets are also contending with massive supply, particularly from Brazil where weather is steadily improving.

Private consultancy Agroconsult lifted its forecast for Brazilian soybean produciotn by 1.8m tonnes, to 104.4m tonnes.

March soybean futures settled the day down 0.4%, at 10.11 a bushel.

Record ethanol production

On paper Chinese tariffs could be read as bullish for ethanol prices, as less DDG demand would reduce profits at ethanol facilities, discouraging production.

But prices came under pressure, as for now plants are producing record volumes.

Data from the US Energy Information Administration reported ethanol production up 6,000 barrels per day last week, to a record 1.05m barrels per day.

And demand is not rising to meet supply, leaving inventories up 1.33m barrels to 20.01m barrels.

March ethanol futures were down 1.3%, at $1.511 a gallon.

March corn futures settled down 0.4%, at $3.57 a bushel.

More dryness fears for robusta

Robusta coffee futures rallied to their highest level in four and a half years, helped by production fears in Vietnam and Robusta.

Jack Scoville, at Price Futures group, saw robusta prices supported by "reports that dry weather in Brazil was affecting production potential".

March robusta coffee futures settled up 2.6%, at $2,218 a tonne.

March arabica coffee futures settled up 0.9%, at 149.00 cents a pound.

Cocoa prices tumble

But cocoa futures fell sharply, as supplies back up in West Africa.

"Traders are getting are indications of big supply and less demand amid wire reports of increasing supplies in warehouses all over West Africa," said Mr Scoville.

"The commercials have been able to buy at much cheaper prices, but are reported to be mostly quiet now."

March New York cocoa futures settled down 3.6%, at $2,127 a tonne.

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