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Morning markets: rains prospects keep corn ahead of wheat

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How long can


maintain its, unusual, premium over



Corn stayed in the lead in early deals on Monday, at least, taking its advantage into a fifth day, as the tight US, and world, supplies highlighted by the US Department of Agriculture last week kept the upward pressure on prices.

Of course, the temptation will be for anyone who can to switch to wheat, given the price gap. And indeed Chicago wheat for July clawed back a little ground, adding 0.6% to $7.64 a bushel as of 07:40 GMT (08:40 UK time).

But that assumes uses can get hold of corn, which may not be not so easy given the extent of continuing US flooding along the Missouri, Mississippi and Ohio rivers.

Brian Henry at Benson Quinn Commodities said "the trade is going to focus on developing logistics problems" until it sorts out how many acres have been lost to the wet US spring.

More rain...

The damp has also been credited with, relatively, strong prices of some other feed ingredients, such as


last week, although the soy product lost some of its mojo on Monday, easing 0.2% to $372.60 a short ton in Chicago, for July, while


for the same month was flat at 56.85 cents a pound.


themselves slipped 0.1% to $13.86 a bushel for July, not helped by data showing a slowdown in lending in China, the top buyer of the oilseed, in May, with loans totalling 551.6bn yuan, short of forecasts of 610bn yuan.

And rainfall is seen returning to North America. Some weather models show, after a quiet start to the week, "a huge area of above normal rainfall covering all the Midwest as well as south eastern states and into the central and upper Plains," said.

"Embedded within that area is a large region of much above normal rainfall running from North Dakota, South Dakota, Minnesota, Iowa into southern Wisconsin, all of Illinois, Indiana and Kentucky."

In the eight-to-14-day period too, "precipitation maps continue to show large areas of above normal rainfall covering all of the Upper Plains all of the Midwest and into North Carolina, Virginia, Pennsylvania, Maryland and western New York state".

$8 a bushel?

Corn for July added 0.5% to $7.90 ¾ a bushel, with the new crop December lot up 0.1% at $7.12 ½ a bushel.

Damp may be a help for crops already sown, but is a curse for farmers attempting to get the last of their crop planted.

"More flooding and rainy weather could possibly drive corn above the strong psychological level of $8.00 a bushel," Lynette Tan at Phillip Futures in Singapore said.

And, as might be expected when spring wheat sowings have already made such poor start, spring wheat, as traded in Minneapolis, soared 1.7% to $10.17 a bushel for July on the prospect of extended difficult conditions.

The weak link in the wheat complex was the Kansas-traded hard red winter variety, which dipped 0.3% to $8.65 ½ a bushel for July, depressed by reports that the drought-tested crop was coming in far better than analysts had expected, on yields as well as quality.

Fibre falls



was 0.8% lower at 148.80 cents a pound for July and down 0.7% at 132.78 cents a pound for December delivery.

It is not clear that any of the rains will spread as far south as Texas, the main US cotton state, where moisture is desperately needed.

But cotton on the Zhengzhou exchange in China, the top buyer, consumer and producer, fell 2.1% to 25,490 yuan a tonne for September delivery.

And indeed signals were generally a little negative from broader financial markets, to which cotton can be more closely given its status as a non-food crop, and so more of a luxury than edible farm commodities.

Oil eased, with New York crude down 0.3% at $99.04 a barrel, with copper dipping in line.

Weak in Asia too

Palm oil

remained on the back foot, down 0.2% at 3,234 ringgit a tonne in Kuala Lumpur, for August delivery, weighed down by Friday's data showing a jump in Malaysian inventories, besides the weakness in the soy complex.


eased 1.0% to 380.00 yen a kilogramme in Tokyo, for the benchmark November lot, with weak import data from China late last week adding to the negative tone imparted by Asian poor car sales statistics.


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