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Evening markets: EU crops suffer triple hit

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Food commodities put up a brave fight against the slump in external markets.

But with a 6% slump in oil prices, a sensitive commodity for crops used in making biofuels, and the dollar trading higher, making commodities more expensive to buyers abroad, it was an uphill struggle.

What was worrying investors in particular was a drop of 5% in Shanghai shares, their worst fall since November, and a worry when China is viewed as leading the world out of recession.

Meanwhile US crude inventories soared 5.1m barrels last week, renewing concerns about the health of the world's biggest economy.

Add to that the lingering concerns in commodity markets in general about ill-tailored regulation on position limits, and on Chicago crop markets in particular about benign weather boosting harvests, and the stage was set for price falls.

Bear spread fails

Still, Chicago soybeans put up a fight, helped by news of a 232,000-tonne shipment from America to China, and fresh rumours of crushers poking around for more.

August beans actually stood in positive territory at 17:00 GMT, up 8.75 cents at $10.63 ½ a bushel, and nearly 30 cents off the day low, although that was in part down to technical reasons.

Many traders had played the market short August beans and long new crop, a spread which many unwound as the market worked against them, forcing prices further the "wrong" way.

Indeed, new crop beans showed losses, with the November contract down 11.25 cents at $9.15 ¾ a bushel.

Tour finds more

That was reflective of later bean contracts and, indeed, wheat and corn pits too. Corn dropped 3.25 cents to $3.17 ¼ a bushel.

Wheat had the extra pressure of upbeat results from the first day of the Wheat Quality Council's North Dakota crop tour to deal with.

The tour found yields in the south of the state of 45.7 bushels per acre, compared with 37.6 bushels per acre last year. The official US estimate is for an overall US wheat yield of 41.9 bushels per acre.

Chicago wheat for September dipped 1.9% to $5.06 ¼ a bushel, with forward contracts showing similar losses.

Contract lows

Its Kansas equivalent fared a little better, off 1.3% at $5.43 a bushel, and European contracts fared poorly too, with the additional pressure of rains fuelling expectations of a mountain of lower-quality wheats for feed markets get through.

August wheat slipped E1.75 to E127.00 a tonne, a fresh low for the contract, which neared E230 a tonne in spring 2008.

London's November wheat, which topped £155 a tonne last summer, dipped £1.25 top a contract low of £101.25 a tonne.

And, guess what, Paris rapeseed for August dropped to a new contract low too, slumping 3.2% to E245.75 a tonne, well below last year's E460 a tonne high.

Big beans

The falls were reflected in many tropical commodities markets too.

London cocoa for September dropped 2.6% to £1,776 a tonne while its New York counterpart, with the stronger dollar to deal with, shed 3.1% to $2,791 a tonne.

Reports of good bean weights in Nigeria, thanks to benign weather, did little to improve sentiment.

However, sugar did better, closing up $1.0 at $486.0 a tonne in London for white sugar, October delivery. New York's raw sugar contract was 0.01 cent up at 18.51 cents a pound.

The commodity continues to be supported by prospects of buoyant Indian imports and reports of weather delays to sugar crushing in Brazil.

By Agrimoney.com

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