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Morning markets: rapid US sowings not enough to depress corn

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sowings were fast. US farmers had17% of their crop in the ground as of Sunday, way ahead of the average rate of 5%, overnight US Department of Agriculture data said.

But that was still a bit slower than many investors had expected, with some forecasts of 25%.

And, with some ideas of weather turning less ideal, if hardly antagonistic - noted below-average temperatures in the eastern Corn Belt, and a broader cold front potentially on its way later in the month, depending which weather model you believe – new crop corn actually got off to a strong start.

The December contract gained 0.3% to $5.31 ¼ a bushel as of 08:50 UK time (02:50 Chicago time) – outperforming new crop November


, which fell 0.5% to $13.48 ½ a bushel.

Sowings switch?

That capped the soybean: corn ratio at 2.54. Have soybeans done enough to steal corn sowings, with any figure above 2.50 seen as swinging advantage to the oilseed?

In 2010, corn area as shown up in a key US Department of Agriculture June sowings report was 1% less than showed up in a March survey of planting intentions, and soybeans 1% ahead, Mark Welch at Texas A&M University pointed out.

This year, that would be equivalent to some 1m acres switching crops.

Technical worries

Whatever, while there was weakness in corn, it was in the old crop contracts.

Rumours of Chinese buying have yet to be shown true. Meanwhile, the technical picture of old crop corn is worsening.

"The old crop May and July contracts were both seen putting in an outside lower day with a new low close for this month's move," Jon Michalscheck at Benson Quinn Commodities said, terming this a "negative" omen.

"We would suspect that a close above the $6.20-a-bushel level maybe needed rather quickly or the market could be setting itself up for a test of the $6.03 late-March low on the May contract."

The May contract was not obliging, falling 0.2% to $6.15 ½ a bushel.

'Would be a dog'

And that put the dampeners on wheat too, which proved reluctant to return to its usual premium against its fellow grain, in the face of such tight world corn supplies and ample wheat stocks.

"Comfortable world wheat supplies continue to hang over the market," Luke Mathews at Commonwealth Bank of Australia said.

The May lot stood still at $6.15 ½ a bushel.

Even that might be considered an upbeat response given that the USDA report also showed winter wheat in strong health, with 64% of the crop in "good" or "excellent" condition, up three points on the week.

Still, as Benson Quinn noted there are "potential weather problems associated with dry or trending drier conditions in key areas such as the Black Sea region, the European Union and western Canada", if adding that these "have not drawn much attention during the recent sell-off".

And there is nothing more likely to inspire a rally in an asset that being written off, as Mike Mawdsley did, saying that "if wheat were an animal, it would be a dog".

'Turning sideways'

In fact, it was soybeans, the market's favourite of late, which looked most hound-like in early deals, with the May lot falling as well as the November contract, down 0.4% at $14.19 ¾ a bushel.

Signally, even its rebound in the last session was not enough to regain the oilseed its 10-day moving average, at a little over $14.27 ½ a bushel, meaning the technical picture is looking a little degraded.

The strong development of US winter wheat revealed in the overnight USDA data is also a depressant for soybeans. An early wheat harvest improves the scope for farmers to sow a follow-on soybean crop (besides also improving near-term feed grain supplies, and eroding the impact of the squeeze on old-crop corn availability).

And, as a further downer, soybean futures fell on the Dalian exchange in China, the top importer, by 0.5% to 4,541 yuan a tonne for the benchmark September contract.

With corn and wheat markets generally "under pressure on increased production outlook, the trend for soybeans may be turning sideways in the short run till weather becomes of more concern in the Northern Hemisphere", Benson Quinn said.

Softs harden

For a better performance, it was necessary to go to New York, where


added 0.4% to 88.59 cents a pound for July, continuing a recovery from a poor start to the week blamed on a one-off options surprise.

And raw


for July gained 0.5% to 22.69 cent a pound, despite talk of India potentially raising its exports further.

These performances were more in line with the general mood on financial markets, which saw Tokyo


gain 2.1%, Sydney stocks add 1.4% and Shanghai shares 2.0%.

The markets were helped by an announcement that South Korea's central bank will buy $300m in Chinese stocks over the next three months.

It should also be noted that the


is ticking higher, adding 0.3% against a basket of currencies, potentially causing a headwind to dollar-denominated commodities.


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