Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

US rain nurtures jump in farm commodity prices

Twitter Linkedin eCard

Forecasts of wetter and wetter weather in the US Midwest sent farm commodity prices sharply higher, with a weaker dollar and stronger oil adding to buying pressure.

The wet weather which earlier in the month disrupted US corn and soybean harvests - which are the tardiest since records began in 1985 - has returned, and looks likely to stick around.

"Widespread rain for the week has started," Allendale, the Chicago broker, said.

"Eventually all areas will see rain sometime between this afternoon and Friday. Harvest will be restricted during this time. Next week's forecast shows rain and possibly snow."

Buy stops hit

With the dollar weakening to $1.50 against the euro, making US crops cheaper to foreign buyers, and a leap by oil above $81 on a smaller-than-expected rise in American crude inventories, the stage was set for a strong performance by crops.

Oil, besides being a flagship commodity, is particularly influential for prices of crops such as corn used as biofuels.

Indeed, prices were strong that automatic buy orders kicked in, adding to upward pressure.

"Some commission house buy stops have been hit on the way up today, adding to the floor wide gains," Vic Lespinasse at said.

"There has been a modest increase in farmer selling but not enough to reverse the rally."

Key levels

Chicago corn used the chance to stage a crack at the $4-a-bushel mark, which it has traded below since June.

It failed by half a cent, before consolidating at $3.97 a bushel by 17:00 GMT for the December lot, up 3.2% on the day.

Soybeans did better at retaking $10 a bushel, with the November contract up 2.4% at $10.05 ¾ a bushel.

A near-term Chicago contract hasn't closed above $10 a bushel since early September.

Funds cover shorts

As for wheat, Chicago's December contract jumped 3.2% to $5.34 a bushel, the best for a spot lot for more than two months, driven higher by spillover support from corn and by funds cutting losses on short positions – bets that prices would fall.

"Large traders seem to be buying out of short positions they have had on against long corn and beans," Allendale said.

"This is providing significant support even while cash markets remain at $1.00+ [a bushel] discount to futures."

'Happy to wait'

The rally was strong enough to make its way over to Europe too, despite a stronger euro, with sterling jumping 1.3% against the dollar after Bank of England meeting notes appeared to downplay the need for further economic stimulus.

Paris wheat for November closed up E1.75 at E129.50 a tonne, its best finish for nearly three months.

London feed wheat for November managed only to match Tuesday's close, of £102.00 a tonne.

Nonetheless, the grain has performed very respectably given the pound's resurgence, David Sheppard, managing director of Gleadell, the UK grain and feed group, said.

"Really, we should be £2-3 a tonne lower, given what has happened to sterling," he told, attributing the grain's resilience to a reluctance by farmers to sell at these levels.

"They have seen the improvement in the market. They are happy to wait."


Twitter Linkedin eCard
Related Stories

Morning markets: Wheat futures stage notable rebound. Other ags less so

Downbeat US crop ratings help wheat futures to respectable revivals, after the last session’s plunge. But trade war worries slow corn, soy, cotton recoveries

Evening markets: Wheat futures plunge limit down, as funds close ag bets en masse

Hard red winter wheat tumbles 6.0% at one point, after rains refresh US crops. Argentine rains hurt soybeans too. But fund flight benefits some ags

Offers to Iraq tender underline competitiveness of Australian wheat

OK, Australian offers do not in Iraq’s tender face Black Sea rivalry. But they are in close price contention with Russian supplies anyway

Currency 'most important factor' for UK farm profitability

Andersons Farm Business Consultants highlights the role of foreign exchange in influencing farmers’ financial welfare
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069