Selling in grains showed signs of slowing - although whether
that heralds a sustained bounce, of course, is entirely a different matter.
Wheat for July
stood lower in late deals in Chicago, on course for its 14th lower
close in 15 sessions.
But the decline was by a modest 0.4% at $6.38 ½ a bushel,
with Kansas City hard red winter wheat, the type which has been stressed by US
southern Plains drought, down 0.2% at $7.36 ½ a bushel.
Corn was actually
higher, by 0.4% to $4.71 ½ a bushel for July, and 0.6% to $4.68 ½ a bushel.
Winter wheat improvement
Not that there was too much bullish talk around, given
growing confidence in US crops, with northern areas drying up to enable a
catch-up in sowings, while southern regions receive much-needed rains.
Data overnight showed the first improvement since November
in the condition of US winter wheat, while farmers caught up with a stack of
corn plantings too.
And this when the crisis in Ukraine appears to be
stabilising, if not receding, an extra reason to withdraw risk premium.
Drought is expected to retreat in the former Soviet Union
this week too.
"The most supportive factor for corn and wheat is the fact
that they are technically oversold with stochastics around 10," said Darrell
Holaday at Country Futures.
At Chicago-based RJ O'Brien, Richard Feltes flagged the calendar
as an extra reason to doubt the likelihood of fund purchases.
"Managed funds are unlikely to extend longs ahead of
month-end on Friday -especially given successive new lows in corn and wheat futures,
and the failure of the mid-May soy rally to follow through on the upside."
Furthermore, the wheat market may be within the pull of
harvest pressure, with European Union combines at least expected to begin
rolling early, with improved yield results expected in the likes of the UK.
In Asia, China is already reaping what is expected to be a
In fact, Mr Feltes added that "with benign-to-favourable US
weather, easing former Soviet Union tension and the approach of fund roll and
month end, it's difficult to identify factors that might drive [prices] higher
other than tight farm holding, induced by increases in US row crop basis levels".
But maybe a lack of producer selling played a part.
And, as an extra prop, there were signs of demand around,
with Jordan purchasing 100,000 tonnes of wheat at tender, optional origin, and
Israeli buyers purchasing 108,000 tonnes of corn and 40,000 tonnes of feed
wheat - albeit with some of the former, and all the latter, thought to be coming
from Black Sea suppliers.
The wheat was purchased at about $236 a tonne c&f, likely
significantly cheaper than the US could supply.
Still, back on harvest talk CHS Hedging noted that "early
harvest reports from Texas show protein between 13-14% with yields of 10-12
bushels per acre".
And perhaps the most bullish factor for grain markets is
exactly the dearth of supportive talk around, with apparent unanimity at a
bearish outlook, which could be perceived as a contrary indicator.
China talk turns more
the safest bet in Chicago for bulls, adding 0.6% to $14.97 ½ a bushel for July delivery,
and 0.3% to $12.42 a bushel for the new crop November contract.
Concerns over Chinese imports alive in the last session,
with talk of fresh cancellations of orders from Brazil, eased a bit with the
announcement of 110,000 tonnes in sales of US soybeans to Chinese importers,
The Philippines purchased a healthy 172,000 tonnes of US soymeal, also for next season.
And, back in China, there was a report of a 10% drop in
soybean plantings in Heilongjiang, the largest producing province, reflecting a
shift to corn.
US soy imports
The tightness in the US balance sheet also continues to concern
investors, although there are signs of imports from Brazil picking up to ease
the squeeze a touch.
"At a lock on the Mississippi River, there were more barges
going north with soybeans than south last week," Country Futures' Mr Holaday said.
"If you were wondering if we have truly seen soybeans
imported, there is your confirmation."
Jefferies Bache flagged talk of boats filled with South American
soybeans arriving in the US ports of Wilmington and Norfolk, with a further
seven cargoes in the pipeline.
However, "this is probably more important psychologically
for the US balance sheet" than actually significant in terms of easing the
Among soft commodities, raw
sugar for July added 0.5% to 17.11 cents a pound, with investors not
proving brave enough to push the sweetener out of the bottom of the trading range
it has been in for three months.
Indeed, at Citigroup, Sterling Smith said that "the market
has become oversold on a technical level and there are renewed worries about El
Nino developing which could adversely affect Brazilian harvest efforts as well
The El Nino often brings with it wetter than normal weather
for Brazil's key Centre South production region.
At Price Futures, jack Scoville also noted reports that the
Indian monsoon "seems to be getting off to a late start and this development
will have to be watched", with India the second-ranked sugar producing country,
and top consumer.
Still, he also noted that "the market needs demand, too, and
there has not been much demand news", a factor sugar bears state as mitigating
against a sustained recovery in sugar prices.
Sucden Financial said that "end users are sitting on
plentiful stocks waiting for values to get to bargain levels before adding to
Coffee out of favour
However, robusta coffee
for July slumped 3.9% to $1,907 a tonne in London, a three-month closing low,
weighing on New York arabica coffee
for July, which dropped 1.8% to 176.15 cents a pound.
The slump in robusta coffee reflected an estimate from the
USDA office in Hanoi of a record Vietnamese crop this year, and all-time high
The production estimate was "larger than expected",
Citigroup's Sterling Smith noted.
Still, he added that "this market has become oversold and
seeing some bargain hunting here should be expected".
Some other analysts were more upbeat too, with Mr Scoville
highlight talk of a decline in offers from Vietnam, the top robusta producing
and exporting country.
"Traders look for more robusta in the market, but there is
talk of less offer from Vietnam as the export pace has been strong lately and
as producers are worried that El Nino could hurt the next production," he said.