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Morning markets: plethora of data gets crop traders juggling

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Thursday was always going to be a big day for agricultural commodity markets, bringing the latest instalment of a key US report series.

The US Department of Agriculture will at 12.30 GMT (1:30pm UK time) release its Wasde briefing, detailing updated estimates on world crop supply and demand.

But that is hardly the only thing that agricultural investors have to consider. Of course, weather is always an important variable, for the northern hemisphere especially at this time of year.

Currently it looks like an, uncomfortably, hot spell in the Midwest is to end in showers heading into the weekend, with a drift in the jet stream south keeping temperatures cooler even into the end of the month.

For Europe, models continue to "show near-normal temperatures and rainfall for France in the 6-to-10 day outlook, but from Germany to Poland into the Ukraine it looks warmer and drier than normal", weather service WxRisk.com said in its latest update.

Unilateral Saudis?

And there are a clutch of macro-economic factors to watch out for too. The

oil

price is one, following Saudi Arabia's failure to persuade the Opec producers' cartel to lift crude output.

The cartel's secretariat said last month an extra 1.9m barrels per day would be needed to meet world demand in the third quarter, a prospect given extra punch by data showing a sharp fall in US crude inventories.

Still, further gains in crude prices were capped by the prospect of Saudi Arabia going it alone on production rises. New York crude added a further 0.6% to cross back above $101 a barrel as of 07:10 GMT (08:10 UK time).

Also, Thursday will bring the latest European Central Bank policy meeting, which is expected to lay foundations for an interest rate rise next month. The euro indeed recovered some ground, sending the

dollar

0.2% lower against a basket of currencies, a support for prices of dollar-denominated assets by making them cheaper as exports.

And Friday will bring Chinese trade data, which will be examined for signs of too little activity, spelling soft demand for raw materials, or of overheating which would spell a further tightening in monetary policy and that threat to commodities orders too. China is the top importer of cotton, rubber and soybeans, among other crops.

Pressure points

Also to factor in are US weekly export sales data, expected to see trade in line with last week's figures – 309,000 tonnes for

wheat

, 700,0000 tonnes for

corn

(could be more if an 823,000-tonne Mexican order unveiled this week is included) and 150,000 tonnes for

soybeans

.

Still, this is likely to play a minor role compared with the Wasde, for which the key forecasts are likely to be those for US inventories at the close of 2011-12.

Traders expect the USDA to cut its estimates for US corn stocks by 129m bushels to 771m bushels, and for wheat by 43m bushels to 659m bushels. The soybean figure is estimated to show a small uplift, of 10m bushels to 170m bushels.

But the scope for revisions does depends on how willing the department will be to change its estimates for US areas and yields so early in the season in response to the dismal sowing period.

Typically, area revisions are kept for a separate acres report at the close of the month.

"Will they change acreage and/or yield estimates? It would be unusual to do so in the June report, but this is an unusual year," Mike Mawdsley at Market 1 said.

Bullish vs wait and see

Whatever, the market "is braced for a bullish corn report and a wait-and-see for soybeans and wheat", he added.

Still, with corn having flown nearly 4% in the last session, appetite for further preparations for a bullish corn number was limited. Chicago's July corn contract added 0.1% to $7.64 ¾ a bushel, with the new crop December lot edging 0.1% higher too, to $6.94 ¼ a bushel.

Soybeans, the laggard of the last session, were a little off form on Thursday too, shedding 0.3% to$13.96 ¾ a bushel.

US soybean supplies, "whilst still tight by historical standards, are not as immediate a concern as corn", Australia & New Zealand Bank said.

Kansas lags

It was left to wheat to lead the pack again, notably in Minneapolis, where spring wheat is traded, and where the volatile July contract continued its rebound, jumping 1.0% to $10.32 a bushel, if remaining well below the $11.20 a bushel hit earlier in the week.

Sowing of spring wheat crops in the US and Canada has been especially slowed by rains.

Chicago wheat gained 0.4% to $7.50 ¾ a bushel with Kansas, hard red winter, wheat continuing to surrender some premium as the harvest of the variety, which is grown in the southern US, gathers pace.

"As harvest progress moves north, Kansas futures continue to lag the other markets," Brian Henry at Benson Quinn Commodities said, adding that "recent harvest reports indicate that some of the crop is better than expected".

Yen pressure

In other markets, New York

cotton

turned upwards, adding 1.0% to 146.50 cents a pound for July and 0.6% to 130.88 cents a pound for the new crop December contract.

The market has been caught in a balance between waning demand, sapped by high prices, and production concerns highlighted by drought in Texas, the top producing state in the US, the biggest exporting country.

Intriguingly,

rubber

fell 0.7% to 387.30 yen a kilogramme in Tokyo, for November delivery, despite what would have appeared a big boost to the tyre ingredient through higher crude prices. Oil market rises lift the cost of synthetic alternatives, which are refined from crude.

However, Ker Chung Yang at Phillip Futures in Singapore noted the appreciation of the yen against the dollar to a one-month high, making yen-based assets that much less affordable.

By Agrimoney.com

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