Farm operator Trigon Agri may believe that Ukraine's unrest
may end up being good for the country's agriculture sector.
But, as pro-Russian militia appeared in Crimea, in southern
Ukraine, investors were worried there may be more than a few bumps on the way,
fostering a revival in prices of both corn
"The hostility in Eastern Europe continues with an armed takeover
of an airport in Crimea," CHS Hedging said. (In fact, it may be two.)
"Traders are watching these events closely as many bushels
of grain are handled at nearby Black Sea ports."
US Commodities said: "The unrest in Ukraine has traders
nervous about exports out of that region."
'Could affect exports'
At Benson Quinn Commodities, Brian Henry said that "people
are worried that infighting could affect future exports.
"I have a difficult time believing that it is worth 12 cents
a bushel," the amount that Chicago wheat for May was up in late deals, or 2.0%,
at $6.01 ¼ a bushel.
"I don't believe the commercials are behind this trade.
Still, the speculators may end up being right."
And, after all, they are still believed to be running a large
number of short positions, which may look more attractive to close after the
previous two sessions of collapse, which to judge by moving average lines put a
lot more shorts back in profit.
'Prospect of winterkill'
Furthermore, the expiry of the March contract pleased
investors, in terms of not provoking any deliveries against Chicago futures, indicating
that sellers were finding more favourable markets elsewhere.
And the pendulum of concerns about US cold appeared to be
swinging back towards the add "risk premium" end.
"Another bitter cold day with many areas lacking snow cover
has traders talking about the prospect of winterkill," CHS said.
Plains hard red winter wheat for May actually added a
relatively poor 1.4% to $6.57 a bushel.
But Minneapolis spring wheat for May gained 1.8% to $6.55 a
bushel as snows looked like fouling up Canadian logistics again, boosting the
appeal of rival US spring wheat supplies.
Ukraine is of course a big exporter of corn as well as wheat, in fact a more important one.
But that was one of the reasons why corn futures for May rose
1.8% to $4.56 ¼ a bushel, but not the only.
The Environmental Protection Agency announcement on revising
(ie reducing) the ethanol mandate "could be at any time, with some believing it
could be today", US Commodities said.
Mr Henry said: "The talk is that the EPA are talking about a
13.5bn gallon figure," for the amount of ethanol which must be blended into
gasoline in the US, up from an initial proposal of 12.7-13.2bn gallons.
"If that turns out to be true, it is good from the standpoint
of meeting the expectation of 5bn bushels of corn usage in 2013-14" in making
ethanol, as forecast by the US Department of Agriculture.
'Crush margins negative'
It was also a positive that soybeans managed to compose
themselves after what had appeared a "disastrous close" to the last session,
when the May contract soared 3.4% at one point only to end lower, prompting
much talk of a "blow off", meaning losses to come.
"The rise in soybeans is offering support to the whole
complex," Mr Henry told Agrimoney.com.
There is plenty of reason to doubt the soy rally, not least
the talk of poor crushing margins in China, as the dent to chicken demand from
bird flu sends the country's poultry industry into retreat.
"There has also been chatter that Chinese meal demand has
dropped as a result of bird flu outbreaks, pushing crush margins into negative territory,"
Anne Frick at Jefferies Bache said.
'Balance sheet is
This in turn is "supporting ideas that purchases of [US
soybeans] will have to be cancelled to keep inbound supplies at manageable
But the trouble for bears is that these, long anticipated,
cancellations have not come yet, leaving the US balance sheet looking tight in extremis.
"On paper, the current USDA balance sheet is unworkable if
all of the export commitments are executed," Ms Frick said.
At RJ O' Brien, Richard Feltes said: "We'll need to see at
least 1m tonnes of Chinese soybean import cancellations to temper bulls, as there
is still old crop US soybean export demand likely to occur from Mexico,
Indonesia and Japan.
"The lack of cancellations today giving a boost to
post-biscuit break soy futures."
Soybeans for May were 1.3% higher at $14.07 ½ a bushel, with
May soybeans adding 1.0% to $456.30 a short ton.