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Morning markets: speedy US sowings hold back corn futures

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When the window opens, US

corn

farmers fly.

The break in the wet weather in the Corn Belt, in the west at least, allowed growers to speed ahead with sowings, getting 40% of their corn crop in the ground as of Sunday, compared with 13% a week before.

Sure, that was still lower than the 59% as of a year ago, and still looks to have the potential of much of the crop compromised. Corn planted after May 10-15 (the exact date depending on who you listen to) tends to have lower yields.

However, it was significantly greater of the 30-35% that markets had expected farmers to get seeded.

"US corn plantings finally got going last week," Australia & New Zealand Bank said.

Margins raised

So that was one reason to expect a soft start for Chicago corn futures.

Another was a return in

oil

to the downward path if, down 1.6% at $100.92 a barrel for New York crude as of 07:20 GMT (08:20 UK time), losing only a small portion of gains of the last session.

The slide in crude, which been especially a barometer of commodity market sentiment of late, was attributed to a rise in margins on the Nymex exchange of $1,250 a contract, equivalent to an extra $2bn outlay in all for oil investors given open interest of 1.65m contracts last week.

Nor did the

dollar

help, regaining 0.3% as concerns about the euro bubbled near the surface, given the return of Greek debts up the agenda.

Weak exports

Corn futures for July in fact shed 0.3% to $7.05 ¼ a bushel, with the new crop December lot sliding 0.9% to $6.51 ½ a bushel, dropping back below its nine-day moving average line.

Old crop corn faced the setback of persistent grumbles about the slow pace of US exports, with weekly inspections revealed on Monday at 27.8m bushels, "not good", according to Mike Mawdsley at Market 1.

"US corn export inspections are slow, reflecting transportation delays and the recent price induced slowdown in demand," Luke Mathews at Commonwealth Bank of Australia said.

'Light rain and moderate temperatures'

However, the grain failed to set the tone in Chicago, with other crops getting a boost from continued slow seedings.

US spring wheat, for instance, was only 22% sown, an improvement on the 10% a week before, but well below the average of 61%.

In Canada, spring crop seeding progress was even slower, at 3% - up just one point on the week - compared with 40% typically completed by now.

"Light rain and moderate temperatures have combined to stymie the general commencement of seeding across the Prairies," the Canadian Wheat Board said.

Prices rise

Nor does weather look like getting too much better, for the next few days at least.

Spring wheat for July gained 0.5% to $9.49 ¼ a bushel in Minnesota for July delivery, with the new crop September lot lifting 1.0% to $9.56 ¾ a bushel.

Winter wheat prices were supported by a further decline, of one point to 33%, in the proportion of the US crop rated in "good" or "excellent" health, half last year's figure.

Chicago wheat for July gained 0.9% to $7.97 ½ a bushel, with the Kansas July contract up 0.6% at $9.19 ¾ a bushel.

Too wet, too dry

Elsewhere,

cotton

sloughed off its recent weakness, helped by data showing continued slow progress in sowings, up six points to 26% during the week, but still well behind the average, at 33%.

"US cotton planting continues to fall behind schedule because of floods in the Mississippi basin and drought in Texas," Mr Mathews said.

New York's July lot edged 0.1 cents higher to 145.50 cents a pound, with the new crop December lot up 0.6% at 117.47 cents a pound.

US

soybean

sowings were also slow, at 7% compared with the 17% typically seeded by now, offering support to Chicago futures, besides the slow pace of Canadian sowings of crops including rival oilseed canola.

Chicago's July lot added 0.3% to $13.39 ½ a bushel, with the new crop November contract up 0.6% at $13.27 a bushel.

China to return?

Elsewhere, food commodities performed better too, with Kuala Lumpur

palm oil

for July gaining 1.1% to 3,272 ringgit a tonne, after official data showed Malaysia's stocks rising, but not nearly as far as investors had expected.

In Tokyo, benchmark

rubber

for October extended gains of the last session, adding 2.9% to 378.40 yen a kilogramme.

"Investors are anticipating China's return to the market after drawing down on domestic stockpiles," Ker Chung Yang at Phillip Futures said.

By Agrimoney.com

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