Wheat prices set fresh one-year highs as weather indicated a
further test, through hot weather, for the drought-hit US crop, which data
overnight confirmed was continuing to deteriorate.
Soft red winter wheat for July hit $7.44 a bushel in Chicago,
the highest for a nearest-but-one contract since February last year, before
easing back to stand at $7.41 ½ a bushel with some 15 minutes of trading to go,
up 1.7% on the day.
Hard red winter wheat, the type at the centre of the US crop
concerns, was up 2.5% at $8.52 ½ a bushel, having hit $8.55 ½ a bushel earlier,
the highest in 15 months for a second-in contract.
The gains came amid further tensions in Ukraine, a major
grain exporter, as Moscow ruled out fresh talks on the country's crisis, unless
pro-Russian opposition groups were involved.
'Ripping up the wheat
Traders also focused on deteriorating prospects for US winter
wheat production, in particular output of the hard red winter type grown in the
drought-hit southern Plains, as forecasts signalled little chance of
"We will likely see some pattern change this weekend that
will introduce more moisture to the Plains and western Midwest, but I am not
sure it will very active," said Darrell Holaday at broker Country Futures.
"There is still no significant precipitation projected in
the western two-thirds of Kansas," the top US wheat-producing state.
CHS Hedging said: "Near 100-degree-Farhrenheit temperatures
and winds are ripping up the southern Plains' battered hard red winter wheat crop."
'Moisture will remain
Weather service MDA said that forecasts showed some rains
this week for parts of Kansas, Nebraska, Oklahoma and Texas.
But coverage will be limited, at 20%, and "moisture will
remain very short in west central and south western areas, further stressing
wheat", MDA said.
And this after US Department of Agriculturedata overnight highlighted
the decline in the condition of the US winter wheat crop, with just 31% seen in
good or excellent condition, down 2 points week on week, and hard red winter
wheat accounting for little of that.
Indeed, USDA scouts warned of conditions similar to the
1930s Dust Bowl in Oklahoma.
"While late-season rains can still reverse the effect of
this early-season dryness, the forecast for the next two weeks is not promising,"
Morgan Stanley said.
"Without meaningful precipitation in Kansas and Oklahoma by
late May, we may need to start reducing our US wheat yield estimate from our
current 46.4 bushels per acre."
Former Soviet Union
soared too, adding 2.3% to $8.07 ¾ a bushel in Minneapolis, lifted by the
strong performance of hard red winter wheat, a rival in higher protein terms, and with the USDA data showing wet weather delaying
sowings of the grain too.
That said, with the euro strengthening, and European production
prospects more upbeat, Paris wheat for November could add only 0.2% to E209.00
London wheat for November did little better, adding 0.4% to
£158.20 a tonne.
Still, there are some crop concerns not too far away, with
MDA noting that while rains had returned to north western Ukraine and southern
Belarus over the past week, "much more rainfall is needed to end dryness there.
Also, in Russia, "dryness continues in the north western
Central Region, north western Volga Valley and central North Caucasus", and
with the latter two looking like missing out on rains next week.
'Not a positive
Wheat's performance helped save corn from weakness which had look unavoidable given the USDA data
overnight showing sowings lagging, but not by enough to concern analysts, and
with some unexpected cancellations of orders from the US too.
Spain ditched 100,000 tonnes in orders US corn, with an
unknown buyer cancelling a further 120,000 tonnes, the USDA said.
That was "certainly not a positive development for a market
that really relied on strong export activity", Country Futures' Darrell Holaday
Most US export news has been surprising strong in corn, including
US weekly shipment data released on Monday.
Still, "the continued strength in wheat continues to result
in fund buying in both corn and wheat," Mr Holaday said.
"The spread between corn and wheat is so wide that as long
as wheat goes up it will be supportive to corn."
And weather forecasts were not all so helpful to corn
plantings either, with rains expected to build later this week, slowing
Corn for July was up 2.0% at $5.13 ¼ a bushel.
Soybeans , as has
been their wont of late, held up the rear, undermined by spreading ideas of large
US imports of the oilseed in train to resolve the squeeze in domestic supplies.
Benson Quinn Commodities said: "The soybean market continues
to battle a deteriorating technical structure and lessening concerns on
bridging the gap from old to new crop on more talk of soymeal and soybean imports."
Such talk "is seeing follow-through liquidation on the part
of the longs".
CHS Hedging said: "Two cargoes from Brazil are expected to
arrive this week and another boat just launched, expected to arrive at the end
of the month.
"Since mid-March, 12.5m bushels of soybeans have been
imported from Brazil, with another 11.5m expected by the end of May."
At RJ O'Brien, Richard Feltes said that "soy liquidation
continues as export sales slow to a halt, crush eases on spring maintenance,
and concern over tight summer soy stocks are mitigated by increasing Brazil soy
Furthermore, a sharp drop in Chinese futures overnight, and a
cut to the commerce ministry estimate for the country's imports last month, did
little to help sentiment.
Elsewhere in oilseeds, palm
oil dropped too in Kuala Lumpur, by 0.6% to 2,568 ringgit a tonne,
undermined by revived production ideas.
Chicago soybeans for July stood 0.4% lower at $14.57 ¼ a
Among soft commodities, cotton
eased, undermined by broader economic concerns which dragged shares lower by 0.4% in London, 0.7% in
Frankfurt and 0.7% in late deals in New York.
Furthermore, there look like being drier conditions ahead for
the US Mississippi Delta region, raising the prospect of a pick-up in sowings
progress by growers well behind on sowings.
Cotton for July eased 0.9% to 93.94 cents a pound in late
deals in New York.
Raw sugar for July
ended down 1.5% at 17.20 cents a pound in New York, heading back towards the
low end of its recent trading corridor.
"Futures remain in a trading range, with the potential for
crop losses in Brazil providing support and the current oversupplied market
conditions keeping sellers active," Jack Scoville at Price Futures said.
While there is "increased buying interest in world markets
as Muslim countries get ready for Ramadan in June", supplies are being
supported by the ramp up of the Brazilian Centre South cane processing season.
As an extra downer, China, once the top importer, looks like
taking in considerably less of the sweetener in 2014-15, perhaps less than its
quota of 1.9m tonnes.
And technically, the July contract lost points by closing
below its 200-day moving average, and below its 100-day moving line for the
first time since February.