soared for a second successive day, returning above $7 a bushel in Chicago and
closing in Paris at their highest in nearly a year, as Ukraine action against
pro-Russian separatists, raising the risk of regional hostilities.
Wheat in Chicago soared 3.4% to $7.01 ¾ a bushel for May delivery,
with the better-traded July contract soaring 3.3% to $7.09 ¾ a bushel.
In Paris, wheat for May 3.4% to E221.25 a tonne, the best
close for a spot contract in 11 months.
The gains followed the announcement by Ukraine's acting president,
Olexander Turchynov, of "anti-terrorist operation" against pro-Russian demonstrators
who had occupied a range of government properties in the far east of Ukraine.
The military action, which Mr Turchynov said had already
retaken the airport at Kramatorsk, raised concerns of a reaction from Moscow
which has used language akin to that used before invading Crimea, warning of
its readiness to protect the Russian community.
Moscow has already said that it is "deeply concerned" by
reports of casualties in the operations, while telling Ban Ki-Moon, United
Nations secretary general, that it expects a "clear condemnation" from the
organisation "and the international community of these anti-constitutional
Dmitry Medvedev, the Russian prime minister, claimed that Ukraine
was close to "civil war".
The impact of the increased tensions was broadly negative to
share prices, which lost 0.6% in
London, 0.9% in Paris and 1.8% in Frankfurt, although New York's Dow Jones Industrial
Average index showed small gains in late deals.
Prices of many commodities fell too, pressed also by
concerns over China's economy, with nickel
falling 3.7% at one point, albeit after a strong run, and copper losing 1.9% to $6,540 a tonne in London.
But declines on the CRB
commodities index were limited to 0.6%, in part thanks to the strong
performance of wheat futures, which have proven a particularly close, and
positively correlated, gauge of concerns over the Ukraine crisis.
Darrell Holaday at Country Futures said: "News broke that
the Ukraine military had moved against locations in eastern Ukraine that had
been taken over by pro-Russian forces.
"Wheat went from unchanged to as much as 20 cents a bushel
'More promising weather
In fact, the May contract ended only 1 cent from its day
high, and nearly 30 cents above its intraday low, reached earlier amid ideas of
rains for the drought-hit southern Plains hard red winter wheat area.
The forecast for the next five days "looks more promising"
for growers, "with nearly 75% of the belt slated for 0.25-1.0 inch rains from
systems on Thursday and this weekend", said Richard Feltes at RJ O'Brien.
And while the region received cold weather overnight, and is
due for more, there are doubts as to its impact.
"A quick look at temperatures in Kansas and Oklahoma showed
a mix of temperatures from the mid- 20s Fahrenheit to low 30s," Benson Quinn
"Some of the lower postings could burn back some vegetation,
but I doubt the bulk of this crop is far enough advanced to suffer serious
At Martell Crop Projections, Gail Martell said: "For wheat
that was very advanced with jointing there would be serious damage.
"However, due to persistently cold weather this spring, freeze
damage is not likely to be severe in Kansas," the top US wheat growing state, "where
crop development is significantly delayed."
The weather outlook turned more benign for corn plantings too, one reason for the
grain's relatively weak gains on Tuesday, closing just 0.2% higher at $5.03 ¾ a
bushel in Chicago for May delivery.
"The lack of buying in corn is because the window is opening
to plant US corn and forecasts are pointing to warmer temperatures," Country Futures'
Darrell Holaday said.
"There are still showers and events in the forecast, but
temperatures are solidly warmer."
Data overnight showed US plantings just 3% complete as of
Sunday, half the proportion usually done by now, thanks largely to cold weather,
which is preventing a warm-up in soil temperatures, besides by excess moisture
in some eastern areas.
"The extended weather outlook is more favourable for field
work and growth," CHS Hedging said.
RJ O'Brien's Richard Feltes said that the "bulk of the Midwest looks open for 10 days, along with
warming temperatures early next week through Friday".
As an extra setback too, ethanol futures for May tumbled 3.3% to $2.265 a gallon in Chicago,
reducing margins for corn ethanol plants.
added 1.7% to $15.01 ¼ a bushel for May delivery, the first close above $15 a
bushel for a spot contract in nine months, and 1.6% to $14.87 ½ a bushel for
July, helped by a surprisingly strong US crush figure.
The NOPA industry group said that US processors crushed
153.84m bushels of soybeans last month, up 8.6% month on month, a far bigger
rise than the 3.2% increase to 146.1m bushels expected by traders.
The figure countered concerns over the threat of Chinese
defaults on import orders of soybeans, provoking ideas that markets were not
doing enough to ration supplies of the oilseed, which are set to end 2013-14 at
their thinnest in at least 50 years.
Sure, the NOPA data were not all bullish for oilseeds, with
US soyoil stocks last month pegged
at 2.02bn pounds, above expectations and the 1.89bn pounds in February.
But there is hope for use of the biodiesel by biofuels
plants, with data from the Environmental Protection Agency showing biomass
based biodiesel output at 134.8m gallons last month, up 5.6m gallons year on
"Based on the EPA series we think soyoil usage for [biodiesel]
may be up 66% in the October-March period from a year earlier," New York broker
Jefferies Bache said.
for July closed up 1.4% at 43.05 cents a pound in Chicago.
The soy complex also received support from concerns over the
impact of inundations on the Argentine crop.
"Recent heavy rains/flooding in Argentina may lead to a
production decrease of 1m-3m tonnes," CHS Hedging said, noting that the "US
Department of Agriculture is currently at 54m tonnes, while other
guesses range as low as 52m tonnes".
Among soft commodities, raw
sugar for July gained 0.9% to 17.47 cents a pound, helped by talk that
India may fall short of its target of 2.0m tonnes in exports in 2013-14.
Exports, for which deals of some 1.4m tonnes have been
struck, "will be somewhere around 1.8m tonnes, lower than our expectation of at
least 2m tonnes for this year", the Indian Sugar Mill Association said, adding
that there had been no orders sealed for two weeks.
But arabica coffee
tumbled by 6.0% to 195.05 cents a pound for July delivery, the most for a
nearest-but-one contract since 2010, as concerns that prices may struggle for
more gains, with harvest now beginning, encouraged profit-taking.
Sucden Financial noted earlier that while futures had, in
recent sessions, struggled to overcome resistance "around the recent high of
210 cents a pound".
The relative strength index, a key momentum indicators, was "unable
to break into new territory above the upper signal line which suggest that the
rally may be overbought and we could see selling pressure dominate in the
Robusta vs arabica
The bean was further undermined by a fall in robusta coffee prices in the last session,
even as arabica futures jumped 1.9%, in a rise attributed to concerns over the
Brazilian drought against a backdrop of weak producer selling.
London-traded robusta coffee for July this time edged down
0.3% to $2,128 a tonne.