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Morning markets: Wheat futures gain on US crop ratings. Soy complex gains too

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Wheat futures, which recovered to achieved some headway in the last session, built modestly on the gains on Tuesday, helped by data showing further deterioration in the US winter crop.


Sure, not all US winter wheat deteriorated. The “good” or “excellent” rating for the Oklahoma crop added 1 point to 7%, while that in Texas gained 3 points to 13%.


But those ratings were still historically weak.


And in Kansas, the top wheat growing state, the reading eased by 1 point to 12% good or excellent.


‘Corrected overbought conditions’


As an extra help, there was less worry that prices seem to have got ahead of themselves from a technical perspective, with Benson Quinn Commodities reporting that “soybeans, soymeal and the winter wheat markets have all corrected overbought conditions”.


Meanwhile, there is plenty of evidence of end users buying even after the recent wheat price rally, with Algeria, Ethiopia and Jordan all in the market, although Iraq has shelved purchase plans citing the higher values.


Thinking of Algeria, Agitel said that “French origins should meet this demand as Argentinian origins have lost some competitiveness”.


Russian prices


That said, as for Russian values, something of a benchmark, “for the first time since mid-December, FOB wheat Russian prices have dropped during last week,” Agritel said.


“Indeed, prices recorded in deep water ports like Novorossiysk slipped by -$2 a tonne to $208 a tonne.”


SovEcon also pegged Russian Black Sea export prices at $208 a tonne, although that was a drop of $1.50 a tonne on its data.


And Ikar too put the price at $208 a tonne, which on its estimates was a $1-a-tonne gain week on week.


Agritel added that wheat prices on Russia’s domestic market “were gaining some ground, especially in the centre region where exporters are sourcing their supplies as cereals availabilities in south oblasts are now reduced”.


Chicago wheat futures for May, meanwhile, gained 0.6% to $4.93 ¾ a bushel as of 09:40 UK time (04:40 Chicago time), while Kansas City hard red winter wheat futures for May added 0.8% to $5.26 ½ a bushel.


‘Well above target’


Soybeans, which had also lost a bit of mojo, weighed too by a US stocks upgrade in last week’s Wasde crop report, followed wheat in revival too, adding 0.4% to $10.45 ¼ a bushel for May.


Weekly US export data late on Monday continued to be welcomed, with Karl Setzer at MaxYield Co-operative saying that “soybean loadings totalled 33.4m bushels and were well above the amount needed on a weekly basis” to meet the US Department of Agriculture’s (downgraded) full-year target.


Meanwhile, both soybean processing products offered a pull, with Chicago soymeal for May up 0.6% at $372.50 a short ton, looking for its first positive session in six, after a correction of 8% from its March 2 high.


And soyoil for May gained 0.6% to 31.95 cents a pound, helped by a 1.1% jump to 2,407 ringgit a tonne in futures in rival vegetable oil palm oil in Kuala Lumpur, where bargain buying lifted prices, after a reversal in the last session from a 19-month low of 2,350 ringgit a tonne raised ideas that a floor might have been set.


Funds vs producers


Chicago corn futures, meanwhile, added 0.1% to $3.91 ¼ a bushel for May delivery, returning to being overshadowed by the other two contracts after temporarily garnering the spotlight, when the USDA in Thursday’s Wasde report put a surprise drop in US corn stocks on the cards for 2017-18.


Overhanging the corn complex is the extent of buying that funds have already undertaken in the grain, raising doubts as to how much purchasing pressure is left.


Meanwhile, the prices are proving strong enough to lure out producer selling en masse, with the gross commercial short topping 1.0m contracts on latest data for the first time in seven years.


Chinese needs


In New York, cotton futures for May added 0.4% to 83.61 cents a pound, amid a continued debate over demand.


“China’s need for more high quality cotton is still being discussed. And with that the likelihood of larger cotton import quotas,” said Tobin Gorey at Commonwealth Bank of Australia.


China’s requirements are also being brought into focus by the resumption of auctions from huge state stockpiles, with the first event, on Monday, seeing 28,105.7 tonnes sold (equivalent to 93.6% of the offer at an average price of 14,633 yuan ($2,314) per tonne.

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