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Evening markets: wheat leads strong June debut

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Wheat and corn set fresh seven-month highs, with coffee hitting its highest since late August, on Monday as a heady cocktail of a weakening dollar, strong external markets encouraged funds to keep spreading investments into food commodities.

All the lights for crops shone green. US equities were more than 2.5% higher at 17:30 GMT, with London stocks already closed up 2.0%, after data showed US manufacturing shrinking less than investors had expected in May. Industrial output expanded in China.

The data helped oil gain a further 2% to May’s bumper gains, with New York crude for July adding $1.58 a barrel to $67.89 a barrel, and Brent crude gaining $1.83 to $67.35 a barrel.

Meanwhile, the dollar sank to year lows against the euro as investors sold out of a currency viewed as a safe haven. That was one reason for gains in Chicago commodities, which look cheaper to exporters the lower the dollar gets.

Palm raised

But fund inflows were credited too, helping commodities denominated in other currencies gain too.

Palm oil closed up 2.5% at 2,625 ringgit a tonne in Kuala Lumpur, with firm Malaysian export data providing an extra boost.

In Europe, London wheat for July gained £2.50 to £124.00 a tonne, with the November contract soaring £3.50 to £134.50 a tonne.

Paris wheat for August added E3.50 to E155.00 a tonne, the contract’s higher for four months.

Wheat sprouts

Still, that wasn’t a patch on the 5.7% rise to $673.25 cents in Chicago’s July wheat, the highest for a benchmark contract since the start of October. Many forward contracts also posted gains of more than 5%.

Corn’s 5.5 cent, or 1.3%, rise to $4.41 ¾ a bushel looked modest by comparison, even though it too was the highest since early October.

Soybeans’ 3% climb above $12 a bushel is reported elsewhere on Agrimoney.com.

Vic Lespinasse, GrainAnalyst.com’s veteran Chicago market watcher, summed it up so: “Prices remain very strong across the floor in active trading with widespread speculative buying continuing, encouraged by ongoing strength in crude oil and equities as well as the weak dollar.”

Beans jump

Among softs, coffee earned the headlines by rising 3.0% to a nine-month high of 141.50 cents a pound for New York’s July arabica beans, with fund buying again credited for the rise.

London robusta beans closed up 1.4% at $1,572 a tonne.

But cocoa also put in a respectable performance, adding 2.1% to $2,643 a tonne for New York’s July contract.

And New York’s July sugar recovered some mojo, after a little profit taking towards the end of last week, adding 1.6% to 15.83 cents a pound, just 0.11 cents adrift of its recent near-three year high.

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