Wheat found some buyers at last.
It took quite a confluence of bullish factors - including a
European stocks forecast downgrade, data on Canadian stocks and downbeat
results from the Wheat Quality Council crop tour of Kansas (described more fully
elsewhere on Agrimoney.com) - to drag wheat futures out of their decline.
But, with a weaker dollar chipping in too - down 1.1% against a basket of currencies - Chicago wheat for
July closed up 2.7% at $4.79 ¼ a bushel, ending back above its 10-day moving
average for only the second time in the past month.
Kansas City hard red winter wheat for July ended 2.9% higher
at $5.04 ¼ a bushel, closing above its 10-day moving average for the first time
in a month.
That said, whether the gains stick into the next session is
a different matter, with rains in the US Plains easing dryness concerns for
'Difficult to sustain
"The rainfall in the Plains is making it difficult to
sustain significant buying interest," said Darrell Holaday at Country Futures.
Benson Quinn Commodities said that "weather for US and
global crops is generally viewed as favourable," although it did flag that some
of the northern Plains might "miss out on potential rains slated through the
end of this week".
In the European Union, the top wheat producer and exporter, rains
"have eased dryness across the UK and much of France, improving conditions for
wheat growth and germination of summer crops", said Kyle Tapley at weather
However, there is some small weather hook for bulls, with dryness
remaining "a concern in Slovakia, Hungary and northern portions of former
Yugoslavia", Mr Tapley said, noting increasing moisture shortages in Poland
"No significant improvement is expected across the drier
areas of Hungary and Slovakia" in terms of rainfall, stretching out into the
middle of the month.
Ethanol output slide
The wheat price gains - which were viewed as largely spurred
by covering by hedge funds of some of their huge net short position, rather
than fresh buying – carried over a little into rival grain corn too, which gained 1.0% to $3.66 a bushel.
From a technical perspective too, "corn gained a fair amount
of support from the fact that it bounced off a new low" in the last session, said
Brian Henry at Benson Quinn Commodities.
Ethanol data was more of a mixed bag, showing a 3.7% drop to
887,000 barrels a day in US production last week – the lowest figure since
October, and the biggest decline since September.
That implies less corn being used by bioethanol plants, for
which the grain is their primary raw material.
However, at least ethanol
futures rose, by 1.5% to $1.652 a gallon in Chicago for June delivery, the
contract's best close in six months, supporting margins for producing the
And corn is getting some support from the firm US cash
"The recent drop in the futures price of corn has pushed
farmer marketing of corn to almost nothing in many locations," broker CHS
"Cash basis levels were noticeably stronger yesterday, as
end users paid up buy hedges inventories to keep corn in the pipeline."
'Fund buying dried up'
Where Chicago bulls noticeably lost out was in the soy
complex, where the strength imparted to the vegetable oils market by an
Indonesian palm export tax, and apparent Chinese buying, faded.
"The fund buying in the soyoil
market seems to have dried up after heavy buying on Monday and Tuesday,"
Darrell Holaday at Country Futures noted.
Soyoil for July ended down 0.5% at 32.92 cents a pound, having
earlier set a two-month high of 32.48 cents a pound.
eased too, ending down 0.2% at $9.82 ½ a bushel for July delivery.
It was little help that a Bloomberg survey reported expectations
the US Department of Agriculture, in crop estimates for 2015-16 released on
Tuesday, will peg soybean supplies at the end of 2015-16 at 446m bushels - 16m
bushels higher than its initial forecast.
Furthermore, Mr Holaday flagged US Census Bureau data from
Tuesday which showed US soybean exports at 91.2m bushels, 3m bushels shy of data
drawn from weekly cargo inspection data.
Country Futures calculations imply that "it is fair to say
that it will be very difficult to reach" the 1.79bn bushels of soybeans that the
USDA believes the US will export in 2014-15.
It was also a negative for oilseeds that Winnipeg canola futures dropped, by 0.7% to
Can$455.40 a tonne for July delivery, despite Statistics Canada reporting
Canadian stocks of the rapeseed variant at 7.04m tonnes as of the end of March.
That was well below the 7.4m tonnes that investors had expected,
besides the year-before figure of 8.68m tonnes.
'Full blown break-out'
Among soft commodities, the weaker dollar, and stronger
Brazilian real, helped raw sugar for
July add 0.9% to 12.87 cents a pound for July delivery.
Besides growing hopes that last week's record sugar delivery,
against the expiring May futures contract, will find a home, some investors are
pointing to the strength in futures in China, a major sugar-importing country.
The Zhengzhou's September white sugar contract closed
earlier at 5,622 yuan a tonne, down on the day but still up 19% so far in 2015.
Some chart technicians are suggesting that the Zhengzhou
contract "is in full blown break-out with a confirmed head and shoulders bottom
indicator in the price action", Sucden Financial noted.
will expand greatly'
However, other softs fared less well, including New York coffee, which tumbled on improved
Colombian production and export data, as discussed elsewhere on Agrimoney.com,
while cotton for July dropped 1.3% to
65.86 cents a pound, undermined by forecasts of benign weather in major US
"Ideas are that planting progress will expand greatly this
week," said Jack Scoville at Price Futures.
"The US weather situation is better as beneficial rains are
forecast for the Texas Panhandle and as drier weather is expected in the Delta
and South East."