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Evening markets: grains end higher, boosted by Wasde, China

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All those tomes of data, and in the end it was something that was not published which ended up having a big impact on grain prices.

Following Thursday's release of United Nations world crop forecasts, and official Brazilian estimates for domestic crops, Friday bought the main event - the US Department of Agriculture's monthly Wasde crop report, besides Informa Economics forecasts for US crop sowings.

And this on top of important macro-economic goings on, with Greece's E206bn debt restructuring, data showing a dip in Chinese inflation, and statistics showing that the US economy created a net 227,000 jobs last month, above market expectations.

This last figure was seen as the spur for a 1.1% jump in the dollar, which for many dollar-denominated commodities took some of the joy out of the employment data, making them less affordable as exports.

The average commodity, as measured by the CRB index, rose a little under 0.5%.

'Negative numbers'

But

corn

managed a bigger rise despite two big headwinds, from Informa's upgrade to 95.5m acres in its estimate for US sowings of the grain this spring, and a Wasde which, while cutting the estimate for world inventories of the grain, made no change to the US figure, as many analysts had expected.

"The Wasde was bearish for corn as the USDA left the US balance sheet completely unchanged," Rabobank said.

At Country Futures, Darrell Holaday said, of corn: "We feel these are negative numbers given the expectations going into the report."

Benson Quinn Commodities said the Wasde "could offer a little bit of a negative to the corn market".

And yet still, Chicago's May corn contract closed up 1.5% at $6.45 a bushel.

Chinese purchases?

The buying stimulus was the reappearance of talk that China had been buying US corn again, with speculation that it had bought up to 800,000 tonnes for shipping form Pacific North West docks.

"Rumours that China bought US corn on the dip fuelled the rally," Mr Holaday said.

"At this point there seems to be some belief that two-to-four cargoes were bought on the price break, but there is no credible evidence that it was China," two-to-four cargoes being more like 250,000 tonnes at best.

Indeed, some steam came out of the rumour mill towards the end of the day, allowing the grain to close well below its intraday high.

'Market is overbought'

Ironically, the grain got a bit of help too from a crop which was better served, price wise, by the Wasde.

"The Wasde was bullish for

soybeans

, as the USDA cut production for Brazil and Argentina a combined 5m tonnes – more than twice the average trade estimate," Rabobank said.

But US Commodities ahead of trading warned that it was "fearful of a buy the rumour, sell the fact trade in soybeans", with the oilseed having had a good run into the report.

Benson Quinn said: "From a technical standpoint, the soybean market is overbought and profit-taking could develop prior to the weekend."

Spreads unwound

So it turned out, and not just plain profit-taking, but selling tinged with the unwinding of spreads too.

"There is a lot of unwinding of long soybean, short corn spreads occurring in old crop today," Mr Holaday said, meaning negative price pressure on soybeans but giving a prop to corn.

Soybeans for May closed down 0.75 cents at $13.37 ¾ a bushel, not a huge drop but remarkable enough for a contract which has only sustained a handful of daily declines since the beginning of February.

'A little supportive'

Wheat

perhaps, from a US perspective, came out best from the Wasde, which cut the estimate for US inventories by 20m bushels, more than the token downgrade the market had expected, and a downgrade attributed to strong exports.

Furthermore, Informa cut its estimate for US wheat sowings.

"The surprise on the Wasde world wheat stocks could support wheat prices," Paris-based Offre Demande & Agricole said.

"Overall the Wasde wheat numbers are a little supportive," Mr Holaday said.

'Still pretty burdensome'

But he added: "US and World stocks are still pretty burdensome," at 209.6m tonnes, downgraded to just underneath the 1999-2000 record.

Chicago May wheat regained a premium over May corn only to lose it again, closing up 1.3% at $6.43 a bushel.

It was, in fact, Paris contracts which did better, helped by the soaring dollar eating into US export competitiveness, while the euro fell back.

Paris wheat for May soared 2.5% to E208.75 a tonne. London's May contract ended up 0.8% at £16.55 a tonne.

Softs soften

Among soft commodities,

cotton

dropped 0.9% to 88.80 cents a pound in New York, hurt by a Wasde upgrade, by 1.6m bales to 62.3m bales, to its estimate for world inventories of the fibre, besides by the slight rowback by India on its export ban.

India allowed cotton which had already passed customs as of Sunday, the day before the ban was imposed, to be exported, while failing at a government meeting to decide whether the curbs should be lifted altogether.

However, for most soft commodities, the Wasde is not important, leaving them to their own devices.

For New York

coffee

this meant falling 1.7% to 186.20 cents a pound for May delivery, a fresh 16-month low for a nearest-but-one contract.

Raw

sugar

for May closed down 1.3% at 23.66 cents a pound, with Lynette Tan at Phillip Futures noting pressure from the "prospect of more exports by India and large Brazilian Centre South cane crop".

By Agrimoney.com

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