Wheat prices soared to close above $7 a bushel for the first time in nearly four months as a wet forecast for Brazil, and a weak estimate for the Argentina crop, compounded ideas of strong demand for US supplies.
Soft red winter wheat for December jumped 2.9% to finish at $7.05 ¾ a bushel in Chicago, the highest close for a spot contract since June.
The rise followed mounting concern at an estimate from the Argentina government late on Thursday of a wheat crop of 8.8m tonnes – meaning a smaller crop even than last year, when sowings fell to their lowest than decades, and well below other forecasts.
"The US Department of Agriculture is carrying 12m tonnes, with the trade was trading 10m tonnes," Darrell Holaday at Country Futures said.
The Buenos Aires grain exchange has estimated the crop at 10.25m tonnes.
'Keep bread prices down'
In fact, there are "many sceptics" of the Argentine government forecast, Mr Holaday said.
However, investors were encouraged to inject risk premium not just to reflect the lower availability of supplies for exports, but the question of whether there will be any Argentine exports at all.
"Traders are waiting for any indication Argentine wheat exports could be halted," Paul Georgy at Allendale said.
Traders at a major European commodities house asked: "Do we detect a whiff of political interference here?
"The Argentine government would love to slap an export ban on wheat, just to keep bread prices down."
'Hurt yields and quantity'
Thoughts of strong demand for US wheat were also buoyed by a wetter forecast for Brazil for the rest of the month – a fillip for corn and soybean sowings, for which soil dryness has been a worry, but bad news for farmers attempting to harvest wheat
"This is not good for the wheat harvest in southern Brazil," US Commodities said.
"Southern Brazil is expected to receive 6 inches of rain. This will hurt yields and quantity," and potentially quality too.
Futures in hard red winter wheat, the key target for Brazilian import demand, added 2.6% to $7.68 ¾ a bushel in Kansas City for December delivery, the contract's highest close in a little over four months.
It also saw the lot close above its 200-day moving average for the first time in eight months.
The grains were reflected in Europe too, where Paris wheat for November ended up 2.5% at E204.50 a tonne, also a four-month closing high.
It was the lot's first close above its 200-day moving average since January.
The prospect of a weak, or zero, presence by Argentina on export markets overcame residual disappointment at Thursday's weekly US wheat export data, as measured by licences, which came in at 269,000 tonnes, down from more than 700,000 tonnes the week before.
"Nevertheless, 8.47m tonnes have been exported so far this season, way ahead of last year - but with a 24m-tonne exportable surplus it needs to be," the European commodities house said.
London wheat for November added 1.6% to £166.60 a tonne, the contract best close since July.
'Harvest has resumed'
Back in Chicago, the other major crops couldn't keep up with wheat – even oats, whose jump earlier in the week was noted by veteran traders on the idea of the grain as a leading price indicator. "Oats knows," as the saying goes.
Oats for December close up 1.2% at $3.35 ¾ a bushel.
And corn and soybeans eased a little, for a stack of reasons.
One was the wetter forecast for Brazil, boosting hopes for seedings there, and another the drier weather in the US, which promised rapid harvest progress.
"Harvest has resumed in many areas. Soybeans are estimated to near 65% harvested," CHS Hedging said.
US export data - at last
In fact, the USDA released data just for the week to September 26 - the first of the missing weeks – showing numbers of 860,700 tonnes for soybeans, 775,200 tonnes for corn and 837,800 tonnes for wheat.
For the week alone, these were within the range of forecasts, of 500,000-1.2m tonnes for soybeans, and 400,000-850,000 tonnes for both corn and wheat.
Whatever, they came too late to prevent soybeans easing 0.2% to $12.91 ¼ a bushel for November, and corn falling 0.3% to $4.41 ½ a bushel for December delivery.
Whether the data are enough to allow a positive start to Monday's session, well at least soybeans are also getting positive comment from a firm basis, attributed to a dearth of farmer selling.
And US corn is winning some bullish plaudits, even in the face of a record harvest, by its growing competitiveness to foreign supplies, with Ukraine prices boosted by harvest delays, as highlighted by Kernel Holding.
Raw sugar nearly matched wheat's performance, ending up 2.6% at 19.50 cents a pound in New York for March delivery, the highest finish for a spot contract in nine months.
Earlier, the contract set a one-year high of 20.16 cents a pound.
Sure, Goldman Sachs had cautioned investors about getting bullish on sugar prices.
But that was shortly before fire tore through a terminal at the Brazilian port of Santos owned by sugar giant Copersucar.
Some 300,000 tonnes of sugar was set ablaze. But, more importantly for prices, is the impact in terms of the destruction of export infrastructure, with capacity of 10m tonnes put offline for months.
Buy the rumour…
New York cocoa futures followed more closely the Goldman Sachs script, falling 1.7% to 2,767 a tonne in New York for December delivery.
Sure, data overnight showed the North American cocoa grind jumping 8.3% year on year in the July-to-December period to 132,000 tonnes, the best result since records began in 2009.
But traders had been expecting a strong figure, with some forecasting a rise of more than 12%, and "buy the rumour, sell the fact" thinking was blamed for the session's pullback in prices.
'Even higher deficit likely'
Still, Commerzbank was upbeat on cocoa price prospects, noting also growth in cocoa processing volumes in Asia and Europe.
"In other words, cocoa grinding increased last quarter in all key demand regions," the bank said, a fact which made an estimate by the International Cocoa Organization of 1.1% growth in world grindings in 2012-13, which ended last month, appear "too low".
For 2013-14, "an even higher deficit is likely, because production looks set to be lower due to unfavourable weather conditions in West Africa, the main growing region," the bank added.
"Cocoa prices, which achieved two-year highs this week of £1,790 per ton and $2,770 per tonne, thus remain well-supported."