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Morning markets: grain prices jump as prayers go unanswered

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If US farmers prayed over Easter for better weather, it's not obvious their plea was answered.

For spring sown crops, notably corn, "the issue last week was whether or not there was going to be an extended dry window as we moved to the first 10-12 days of May," so allowing for speedier plantings, David Tolleris at WxRisk.com said.

"The first 10 days of May is not going to be dry. Of course one could argue that the first 10-12 days of May 20111 do look drier than what most areas have seen in April, and that would be correct."

Furthermore, a so-called Cas, or climate soil moisture analogue, weather model came out over the weekend, "showing large areas of temperatures remaining below normal over all of the upper Plains and Midwest and rainfall well above Normal for all of May and June", Mr Tolleris said.

Russian delays

Meanwhile, it looks to remain dry for the US hard red winter

wheat

areas where a lack of moisture is the problem.

While one model has a system bringing significant rain around May 8-9 into Kansas and Oklahoma, where winter wheat is suffering, "the model has probably shifted this low too far to the south", he said.

The forecasts lowered further expectations of bin-busting crops to ease concerns over food supplies, and sent grain prices firmly higher.

And it is not as if all is hunky dory for crops abroad too, with a late spring limiting to 1.03m hectares spring grain sowings by Russian farmers, down 40% year on year, and cutting hopes of the country being able to make up for drought-depressed autumn seedings.

Minneapolis spring wheat for May added 2.8% to $9.87 ½ a bushel for the best-traded July contract, with the Kansas (hard red winter wheat) July lot up 2.5% at $9.66 ½ a bushel, as of 07:40 GMT (08:40 UK time).

Chicago wheat jumped to a two-month high of $8.21 ¾ before easing back to $8.19 ¼ a bushel for May, up 2.5% on the day. The July lot was 2.4% higher at $8.54 ½ a bushel.

Key date

And

corn

wasn't too far behind, adding 2.1% to $7.52 ¾ a bushel for May and the same to $7.60 ¼ a bushel for July.

The new crop December lot gained 1.5% to $6.75 ½ a bushel, with US Department of Agriculture data released after the close of play expected to reveal further weak progress on American corn sowings.

Jon Michalscheck at Benson Quinn Commodities said: "A year ago as of April 25 corn was 50% planted with 22% being the average.

"This year we will be lucky to be 10%+ planted and may struggle to be 50% planted by the week of May 8 based on the current weather forecast."

That's an important time of year as US corn sown after May 10 has, as a rule of thumb, a lower yield potential.

'Record highs'

At Phillip Futures, Ker Chung Yang added: "If the planting delays persist, it can push up near-month corn futures in Chicago towards record highs of $8 a bushel.

"Inventories in the US, the world's largest exporter, are already running low."

Meanwhile,

soybeans

continued to lag, gaining some spillover strength from grains, but still depressed by signs of weak Chinese demand.

Chicago's July lot was unchanged at $13.89 ¾ a bushel. Meanwhile, the prospect of sowing delays prompting farmers to switch from corn to soybeans, which are later planted, left the new crop November lot down 0.1% at $13.80 ¾ a bushel.

Rubber drop

Elsewhere,

rubber

had a poor day in Tokyo, with the October lot, in its opening day as the benchmark contract, tumbling 5.3% from its opening price to 395.4 yen.

"Investors are awaiting clearer cues on this year's production after the wintering season as Thai production may pick up after last week's Songkran break and recent floods," Mr Ker said.

Thailand is the top producer of the tyre ingredient.

By Agrimoney.com

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