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Morning markets: crops start cautious, awaiting data spate

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Friday isn't just the last trading day of the week, a time when investors often draw in their horns a little.

It is also the second last trading day before the next important US Department of Agriculture report, the monthly flagship Wasde report on world crop supply and demand, which has taken on extra importance this time because of the shock inventory and acreage statistics revealed last week.

How will extra supplies feed through into the all-important inventory estimates? Has the USDA any other surprises in waiting?

There have been some initial estimates, with Informa Economics set to release its ideas in the day.

But this potential uncertainty was reason for caution in early deals. Or, to at least to wait for Chicago's live trading session before stepping out big time.

'Much above normal temperatures'

What direction there was was generally positive, for various reasons.

For one, the talk of huge Chinese buying still grips the market.

Another is the dearth of deliveries against the expiring July

corn

and

soybean

lots, indicating that sellers are having more joy on cash markets which remained notably firm even during the collapse in futures markets last week.

And then there is the weather, and the question of whether the Midwest is on for crop-damaging heat.

Forecasts for the six-to-10 day and eight-to-14 day timescales show "large areas of above normal temperatures" covering the Plains, Midwest, deep South and north east of the US, WxRisk.com.

"Embedded in that area is a large area of much above normal temperatures covering the heart of the Midwest."

'Development concerns'

That could be a worry.

"A possible ridge of high pressure forming in the western Plains after the middle of the month is raising development concerns for the late planted soybean crop," Kim Rugel at Benson Quinn Commodities said.

"As soybeans get closer to key development phase in August, any talk of ridge building, like in recent weather models, risk premiums are being built into the market."

The oilseed added 0.1% to$13.41 ¾ a bushel for August delivery, and the same to $13.39 ½ a bushel for December delivery.

Bittersweet for wheat

Corn did better, supported by the China buying talk too. The September contract added 0.6% to $6.28 ½ a bushel, while the new crop December contract gained 0.2% to $6.17 a bushel.

Wheat

eased 0.5 cents to $6.34 a bushel in Chicago for September delivery, still feeling pressure from the northern hemisphere harvest and feeling the frustration of an uptick in orders - Bangladesh was the latest to issue a tender, for 50,000 tonnes - at a time when Russia is competing hard on price.

Russia, which only lifted its grain export ban a week ago, won Egyptian and Jordanian tenders this week.

"On the one hand wheat prices have declined to levels that have stimulated significant consumer demand. This will help support prices," Luke Mathews at Commonwealth Bank of Australia said.

"But on the other hand, [recent] sales are Russian, not US or Australian. As a result, US and Australian values will remain under pressure. "

The crop which managed the strongest start was

cotton

, buoyed by prospects for US heat besides disappointing Chinese sowing data out on Thursday, showing the area up 5.2% year on year, below an earlier forecast for a 6.6% increase.

New York's December lot gained 1.5% to 115.20 cents a pound.

Data later

But there are plenty of factors around to influence progress later, for cotton and other crops.

Besides much-watched American economic data, in a non-farm payroll report, crop investors have the Informa estimates and weekly US export sales statistics to assess.

Wheat sales are expected in line with last week's 545,000 tonnes, with corn expected to show a small improvement from 934,000 tonnes and soybeans at least a tripling from the 122,500 last time.

Cotton's export sales are at least pegged positive, by 30,000-70,000 running bales. (Old crop sales have been negative for all but one of the last 16 weeks.)

By Agrimoney.com

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