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
"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 ¾ a
And in Kansas City, March hard red winter wheat futures settled
down 1.7%, at $4.30 ¾ a bushel.
Tight spring wheat
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 ¾ a
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
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
With lower DDG imports, Chinese feed mills will have to turn
to domestically crushed soymeal, encouraging bean imports.
Upgrade to Brazilian
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 ½ a
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.
futures settled down 0.4%, at $3.57 a bushel.
More dryness fears
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
March robusta coffee futures settled up 2.6%, at $2,218 a
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