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Morning markets: crops regain their fizz

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Crops rediscovered their mojo on Friday, helped by forecasts of wet weather to delay the US corn and soybean harvests, and by continued short-covering in wheat.

The dollar did its bit, falling to a fresh 14-month low of $1.5064 against the euro on an official Chinese report saying that Beijing should put more of its foreign exchange reserves into euros and yen.

A cheap dollar makes US exports such as farm commodities more competitive.

Rain to come

But traders also cited forecasts of a return to wetter conditions in the US Midwest following a somewhat drier weekend.

The current "more favourable" conditions for harvesting will be followed by rain "mid-to-late week", DTN Meteorlogix said.

Data later on Monday will show just how well farmers have done in trying to get corn and soybeans in the bin in recent days, with last week's statistics pegging the harvest as the tardiest since records began in 1985.

Fund positioning

Corn is also benefiting from short-covering by funds, amid a continuing bounce from September lows. Funds closed more than 17% of their short positions on Chicago corn in the week to October 20, regulatory data showed.

For wheat the figure was only 9% but, given the huge number of fund short positions on wheat – until last week funds held twice as many short as long positions, the opposite of corn – the figure is being viewed with special interest.

While short-covering at higher prices implies that many funds will have lost money on wheat, given its roughly 23% revival since early September, a popular trade has been to balance this position with a long investment in corn.

Corn has rebounded more than 30% over the same period.

Kansas outperforms

The grain continued the rebound on Monday by adding 5 cents to $4.02 ¾ a bushel for December delivery.

Chicago wheat was 9 cents higher at $5.56 ¾ a bushel, with its Kansas peer doing better, adding 11.25 cents to $5.60 ¾ a bushel. Kansas's typical premium over Chicago disappeared during intraday trading many times last week, pressured by relatively high stocks of the hard red winter wheat it trades.

Soybeans, meanwhile, added 12.5 cents to $10.18 ½ a bushel for November delivery.

Palm slides

In Kuala Lumpur, its rival in the vegetable oil market, palm, was less successful, easing from a seven-week high despite data showing a surge in Malaysian palm exports.

Intertek Testing Services, the cargo surveyor, reported shipments up 16% at 1.12m tonnes for the first 25 days of the month.

Nonetheless, the benchmark January contract closed the morning session on the Bursa Malaysia Derivatives Exchange down 13 ringgit at 2,225 ringgit per tonne.


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