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Morning markets: slow sowings brake slide in wheat prices

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Hello stranger. Who should turn up after the close of markets on Monday with a wheat tender but Egypt, the world's biggest buyer of the grain, which had gone to ground since February.

Rumours swirled that this absence – after a long stretch of tenders every fortnight or so - was down to financing, or political, problems following the country's ousting of Hosni Mubarak as president, although Egypt merely said it had plenty of the grain.

Whatever, the country is back after wheat now – but not from Russia which, while it has lifted its ban on exports from July 1, has not been forgiven by Cairo for the curbs, which left Egypt scrambling to replace Russian supplies.

Argentina, Australia, Canada, France, Germany, the UK and the US are in the running.

'Abandon significant acreage'

That offered some good demand news for the

wheat

market, which had some supportive supply data out overnight on the pace of spring wheat sowings, showing US plantings maintaining a slow, wet-hampered pace.

Nine points of the crop was seeded, to hit 88% completed. They are usually over by now.

Canada's plantings were at 86%, compared with 96% usually in the ground by now.

"Pockets of Saskatchewan and Manitoba made some good seeding progress, but many farmers are now being forced to abandon significant acreage due to excess moisture," the Canadian Wheat Board said.

Meanwhile, there was mixed news out of Argentina, with the approval of the first 3m tonnes of exports from the 2011-12 crop (albeit likely only to be a small proportion of the final figure, pegged by the US Department of Agriculture at 15m tonnes).

However, Matthew Pierce at PitGuru scored a point for bulls in saying that "in Argentina I'm hearing that hot temperatures and high winds are slowing their winter wheat sowings".

'Heavy' market

This was enough to put the brakes on wheat's slide, as noted in the last session.

But with Minneapolis spring wheat for July up 0.3% at $9.87 ¾ a bushel, Kansas hard red winter wheat up 0.2% at $8.52 ½ a bushel and Chicago soft red winter wheat flat at $7.43 a bushel, the uplift was hardly generous.

Indeed, further-ahead contracts showed losses.

Farm commodity investors were not in the mood, at least as of 07:15 GMT (08:15 UK time), with Benson Quinn Commodities noting a market that felt "heavy".

Technically, wheat faced some turbulence, after the grain in last session "blew past last week's lows like butter", Mike Mawdsley at Market 1 said, noting that Kansas wheat faced a tussle with its 200-day moving average, at $8.45 a bushel.

Improving health

Corn

, meanwhile, fell 0.7% to $7.77 ¼ a bushel for July, losing ground on slightly better-than-expected US sowing progress, than expected, with 99% of intended US sowings completed compared with expectations of a 96-98% figure.

That said, as Luke Mathews at Commonwealth Bank of Australia noted, "recall that the 'intended' acreage estimate was reduced last week", by 1.5m acres to 90.7m acres.

Still, the condition of the crop improved too, with 69% rate in "good" or "excellent" condition, up two points on the week, and closing the gap with the 77% a year ago.

'Emergence still lags'

Soybeans

again did best, adding 0.1% to $13.84 ¼ a bushel for July delivery, with crop progress data showing seedings in line with expectations, at 87% completed compared with an average of 89% by now, while condition was a touch worse than some had expected, at 67% in good or excellent health.

A year ago the proportion was 73%.

Kim Rugel at Benson Quinn added that while "national planting is now near normal pace, emergence still lags at 64% emerged compared to a 76% five-year average, with emergence notably lagging in the eastern Midwest and northern states".

Whether soybeans hang on to gains later may depend on US industry crush data for May expected to come in at 121.56m bushels, marginally ahead of April's 121.33m bushels, with soyoil stocks expected to have shrunk to 2.55-2.65bn pounds from 2.69bn pounds in April.

'Temporary alleviation'

Cotton

was a bit out of sorts too, down 1.0% to 149.49 cents a pound for July, despite US data confirming the poor condition of the crop, with only 28% rated in good or excellent condition compared with 62% a year ago.

In Texas, the top growing state, the proportion was only 18%.

Still, the state has received some recent rains, at Mr Mathews noted.

"Totals were probably sufficient to promote germination for many dryland crops and provide a temporary alleviation to irrigation requirements," he said.

"But still, World Weather reports that the totals were too light to seriously change the poor crop situation and much more rain is urgently needed."

Inflation data

Agrimoney.com should also mention Chinese inflation data which, at 5.5% last month, were higher than in April, but in line with market forecasts.

Copper

and

oil

markets took the statistics in their stride in early deals, showing small gains.

By Agrimoney.com

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