Wheat futures tumbled
in the US amid ideas that prices had risen above levels needed to ration
drought-thinned supplies, while improved hopes for northern Midwest sowings undermined
However, sugar futures enjoyed more popularity, jumping 3%
to close above 18 cents a pound in New York for the first time in two months,
as Datagro joined analysis groups raising expectations for the world production
deficit next season.
Chicago soft red winter wheat, the world benchmark wheat
contract, ended 2.7% lower at $6.90 ¼ a bushel for July delivery in late deals,
on course for a sixth successive negative close.
'Limited the interest'
The decline was attributed to ideas that prices had risen
more than enough to ration exports of US supplies, which look likely, for hard
red winter wheat at least, to be in short supply next season thanks to drought
and frost damage to southern Plains crops.
The US Department of Agriculture has forecast the European
Union for the first time overtaking the US in 2014-15 to become the world's top
"The move up in US wheat values has limited the interest in
US wheat exports," Darrell Holaday at Country Futures said.
At Citigroup, Sterling Smith told Agrimoney.com: "Globally,
we do not have a shortage of wheat. There is a shortage of hard red winter
wheat in the US, but that is a different thing.
"Global cash prices are not going to climb to meet the
board," as in Chicago Board of Trade values.
Already, looking abroad, Richard Feltes at RJ O'Brien noted
that cash wheat traders are highlighting the "difficulty Black Sea exporters are
encountering selling July/August wheat cargoes, despite falling prices".
The Black Sea is renowned as a fierce competitor on price.
Wheat vs corn
Don Roose, president at US Commodities, said that wheat futures
were also being undermined by their unusually high premium over corn, a gap which had risen above $2 a
bushel (a stark contrast to the, unusual, discount that wheat stood at two years
"You are going to have less feeding of wheat. There will be
less exports of US wheat," both price negative factors.
Furthermore, history shows that "typically in short crop years,
US wheat puts in a top as we start harvest, which is not that far away".
Harvest time, in bringing a ramp up in supplies, tends to
undermine prices by switching some market power to buyers.
'Favourable for planting'
As an extra setback for prices, forecasts improved for
planting in the northern US, where sowings of spring wheat, as well as of the
likes of corn, have been held up by wet and cold weather.
"Drier weather in the north western Midwest and north
eastern Plains through the weekend will allow planting there to improve significantly,"
Minneapolis-based Benson Quinn Commodities said: "The
current forecast looks favourable for progress in portions of central and
western North Dakota.
"The next 3-4 days will be clear," if cool, but temperatures
next week are expected to warm up "closer to normal".
And as further points for bears, Egypt, the world's top
importer, said it had bought some 2m tonnes of wheat from the local market, and
was hoping to purchase the same again, in a programme to reduce its reliance on
And the technical appeal of wheat futures took a knock,
particularly in Chicago, where the July contract fell through its 40-day and
50-day moving contracts with little resistance, ending below these lines for
the first time since February.
"The technical structure of the wheat market continues to
break down," Benson Quinn Commodities said.
In Minneapolis, hard red spring wheat for July closed down
2.1% at $7.78 ¼ a bushel, while Kansas City hard red winter wheat for July lost
3.3% to close at $8.05 ½ a bushel.
Losses in Paris were more curtailed, with the grain never
having enjoyed the rally that US contracts did, with the November contract
ending down 1.2% at E201.00 a tonne, ending below its 50-day moving average for
the first time in three months.
'Better chances of
With northern US sowing conditions improving prospects for corn sowings too, futures in the yellow
grain dropped as well, although less emphatically.
"Weather forecasts are showing better chances of clearing
skies for much of the upper Midwest, which should allow planters catch up," CHS
And as for the Corn Belt proper, RJ O'Brien's Richard Feltes
flagged talk from seed dealers that "some producers are upping initial corn
As an extra setback, technical support levels failed as July
corn dropped 1.4% to $4.95 ½ a bushel, while the new crop December lot fell 1.2%
to $4.89 a bushel, its weakest close in some seven weeks.
Weekly US ethanol production data were actually not so
bearish, rising by 28,000 barrels a day to 922,000 barrels a day last week, but
stocks rose by 162,000 barrels to 17.3m barrels, dampening the positive impact.
It was left to soybeans
to protect bulls' hopes, which the oilseed did somewhat reluctantly, adding
0.2% to $14.86 ¾ a bushel for July delivery.
The new crop November lot did a little better, adding 0.3%
to $12.22 ½ a bushel for July delivery, with improved hopes for corn sowings
lowering the risk of farmers switching to soybeans, which can be later planted.
Firm US cash markets also helped, with the strong demand at
China's auction of soybeans from state reserves offering some positives.
But elsewhere among oilseeds, canola could not keep up its rally, as Agrimoney.com mused on
earlier, undermined by improved Canada sowings prospects.
July futures closed down 0.9% at Can$492.80 a tonne in
Winnipeg, having hit a six-month high of Can$504.10 a tonne earlier.
'World surplus fading
For real gains, it was necessary to go to soft commodity
markets, where raw sugar futures for
July soared 2.5% to 18.25 cents a pound in New York, the highest finish – bar one
– for a spot contract in seven months.
London white sugar
for August gained 1.8% to $494.40 a tonne, the best finish for a spot contract
in nearly eight months.
The sweetener has been boosted by surprisingly bullish
chatter emanating from a trade gathering in New York, where Datagro became the
latest analysis group to issue more bullish data for 2014-15, raising its
estimate for the world deficit to 1.61m tonnes, from 2.46m tonnes.
"The world surplus is fading very quickly," said said Plinio
Nastari, the Datagro president, flagging the drought damage to production hopes
for the Brazilian Centre South cane crop, which he pegged at 574.6m tonnes.
The comments followed more bullish assessments on Monday from
the likes of Platts Kingsman, the International Sugar Organization and Copersucar, while industry group Unica
highlighted a slow start to Brazil's 2014-15 sugar production campaign.
However, New York arabica
coffee eased 1.5% to 184.20 cents a pound for July delivery, as investors looked
for Brazil harvest news to help determine just how much damage drought earlier
this year wrought.
"The market is still waiting for news of actual harvest
yields in Brazil," said Jack Scoville at Price Futures, adding that weather news
was positive for farmers in Central America, where "rains are appearing that
should trigger a new round of flowers, and also will help cherries as they
start to appear for the coming crop".
Talking of Brazil, Citigroup's Sterling Smith said that "harvest
weather is currently favourable, and as bull markets need to be fed, this one
is looking for food".