Managed money, a proxy for speculators, decreased its net long position in US traded agricultural commodity futures and options by more than 47,000 contracts in the week to last Tuesday, regulatory data show.

The decrease, the first in six weeks, reflected in part a return to taking a more negative stance on corn, after a week in which US farmers planted the grain at a record pace, easing concerns over a yield penalty from sowings which had been running at a historically slow level.

Hedge funds also returned in New York arabica coffee to building a net short position, meaning short holdings, which profit when prices fall, outnumber long ones, which benefit when values rise.

Arabica coffee futures have come under pressure from expectations of a strong Brazilian harvest, at a time when producers still have significant quantities of last year’s crop to sell.

‘Mills to close’

However, speculators raised their net short position in New York-traded raw sugar futures and options by even more, 12,687 contracts to just under 78,000 contracts, not far short of the record high reached earlier this year.

Going short on sugar has proved a winning bet, with prices of the sweetener setting a series of near-three-year lows last week, depressed by ideas of a strong Brazilian cane harvest, and with selling fuelled by what Deutsche Bank termed “muted” sentiment at New York sugar week.

Indeed, it was “a common belief” at the gathering “that some Brazilian mills would close next year owing to poor financial condition” caused by the poor sugar prices, the bank reported.

Prices recovered somewhat on Friday, by 0.5% to 16.84 cents a pound, in part on concerns over the extent of the net short position revealed in the US regulatory data.

Indeed, Tom Kujawa at Sucden Financial termed the extent of the bearish positioning “perhaps the best chance of a short-term upside correction” in prices, given that extreme net short positions question where further selling will come from.

Down on wheat

Hedge funds also hiked their net short position in Chicago soft red winter wheat, and by more than 20,000 contracts – the fastest turn bearish in positioning since September 2011.

The sell-down, which was also evident in Kansas-traded hard red winter wheat, was fuelled by the prospect of the northern hemisphere harvest, and a jump in supplies, so weighing on prices.

Furthermore, wheat felt pressure from the sell-down of fellow grain corn thanks to the pick-up in the pace of US spring sowings.

However, prices of wheat, like corn, recovered in the second half of last week, by 2.5% in Chicago, in part thanks the return by many farmers to the back foot, following fresh Midwest rains.

Chinese order

Wheat futures have also been lifted by improved demand ideas, with the US Department of Agriculture on Thursday reporting weekly export sales of more than 950,000 tonnes, twice as much as many investors had expected.

On Friday, the USDA also confirmed the sale of 180,000 tonnes of soft red winter wheat to China for 2013-14 delivery, part of what was believed to be a larger order.

“The trade indicates this was only a portion of the tonnage actually booked, with speculation ranging on how much larger this massive programme can or will get,” Jonathan Watters at broker Benson Quinn Commodities said.

“Some expect substantial purchases to come if the board declines into harvest.”

Further buying

Indeed, on Monday, China’s CNGOIC think tank revealed that the country had in fact bought up to 650,000 tonnes, of the grain last week.

The CNGOIC said that the purchase price, of $320-328 a tonne, was 11.6% cheaper than domestic values, which have been elevated by ideas that last year’s harvest was far smaller than official forecasts say, having been damaged by fusarium blight.

Furthermore, this year’s crop has suffered weather damage in many areas.

And the quality of much wheat in state inventories is also believed to be of questionable quality.

While US markets were closed on Monday for the Memorial Day holiday, Mr Watters said that development in the wheat market “don’t exactly call for wheat to fall apart as we head into harvest”.

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The US Department of Agriculture, in its first forecasts for 2013-14 season, pegged the world wheat harvest at a record 701.10m tonnes, lifted by a sharp recovery in former Soviet Union harvest, and increases in Australia, Canada and the European Union too.

“Production is projected higher in all of the world’s major exporting countries,” the USDA said in its benchmark Wasde report on world crop supply and demand.

Indeed, the Russian harvest was seen rebounding 49% from last year’s drought-affected levels to 56.0m tonnes, narrowly overtaking US production.

The world figure was above forecasts from other commentators, including a 695m-tonne forecast from the United Nations Food& Agriculture Organization on Thursday, and a 680m-tonne estimate from the International Grains Council.

Export competition

With all major world wheat exporting enjoying strong harvests, the US itself faced a drop of nearly 10% in its own shipments, to 25.2m tonnes (925m bushels).

“Large crops for major export competitors limit opportunities for US wheat,” the USDA said.

The impact was exacerbated by strong crops in many importing nations, with Middle Eastern purchases, for instance, expected to drop more than 20%.

“Also affecting global trade prospects are year-to-year production increases for major importers, the Middle East and North Africa, where weather has been favourable for winter crops since seeding last fall,” the USDA said.

Market reaction

World stocks were seen rising by 6.2m tonnes to 186.4m tonnes over 2013-14, with higher feed use in the likes of the European Union and Russia swallowing up much of the extra output.

Nonetheless, US farmers were expected to receive $6.15-7.45 a bushel for their wheat, down from $7.80 a bushel this season and, at the midpoint for the range, signalling a downgrade from the $7.00 a bushel the USDA outlined in initial estimates in February.

On the markets, Chicago wheat for July finished at $7.04 ¼ a bushel in late deals, down 2.7%, extending losses ratcheted up ahead of the report.

Paris wheat for November, which had shown a marginal loss ahead of the Wasde, closed down 1.1% at E208.75 a tonne.

London wheat for November ended down 0.8% at £181.50 a tonne.

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The US Department of Agriculture’s Kiev bureau forecast that the Ukraine wheat harvest will hit 22.6m tonnes this year, up from 15.8m tonnes last year, and making it the third highest out of the last 20 years.

“Winter wheat plantings were almost unaffected by winterkill and thus overall wheat area could be almost 20% higher than in the previous season,” the bureau said.

The recovery will allow exports “to increase up to 11.0m tonnes as a result of an expected good harvest and generous supply”.

‘Increase stress’

However, the forecast contrasts with lower, and decreasing, harvest estimates from within Ukraine itself, where dryness is causing increasing concerns over both winter crops and the planting of spring crops such as barley and corn.

As of April 23, Ukraine farmers had sown 3.3m hectares of spring grains, down from 6.0m hectares a year before, according to farm ministry data.

MDA warned of a further period without rain for especially eastern Ukraine, as well as south western areas of Russia, a major export area.

The six-to-10 day outlook shows that “dryness will build further in eastern Ukraine and the western North Caucasus”, the weather service said.

“This will increase stress on winter wheat.”

‘Growing concerns’

At broker FCStone, Jaime Nolan Miralles urged “caution” over trading on the USDA bureau estimates, flagging “growing concerns” over the lack of rainfall in Ukraine and southern Russia.

“Southern Ukraine in particular is lacking in moisture and temperatures are slowly pushing higher,” he said.

“Additional rains will be required, if we are not to see a downward revision to these estimates on final yield reductions.”

UkrAgroConsult, the analysis group, forecasts Ukraine reaping a 20.23m-tonne wheat harvest, with rival ProAgro putting the figure at 19.89m tonnes.

Seed boost

However, the USDA bureau’s forecast of a 22.0m-tonne corn crop in Ukraine, a rise of a little over 1m tonnes year on year, was more in line with market expectations.

UkrAgroConsult sees the corn harvest at 21.8m tonnes, and ProAgro at 21.4m tonnes.

The bureau said: “The area under corn would decline slightly as there is no need to replant large winter losses of other grains with corn as happened last year.

“However, corn yields are expected to be better.

“Ukrainian corn producers have been exploring the benefits of imported high quality hybrid corn seeds and are becoming more knowledgeable about corn seed choices.”

Ukraine corn exports – on which buyers from the Middle East and North Africa are increasingly relying, and which have reportedly gained entry to the Chinese market too – were pegged at 14.0m tonnes, a rise of 12.9% year on year.

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The UK farming and environment ministry, Defra, will on Wednesday unveil fresh forecasts for UK cereals supply and demand in 2012-13, a season marred by a dismal harvest, with wheat yields at a 20-year low, and the lowest bushel weights on records.

The poor result has provoked ideas that the current Defra estimate of UK wheat imports of 2.0m tonnes, while a historically high figure, may be too low, after topping 1m tonnes in the first five months of the marketing year.

Import upgrade?

A major European commodities house “it looks as if the season [import] total will be above 2.5m tonnes”, a figure which would top the 2.3m tonnes that Saudi Arabia is expected to import in 2012-13, according to US Department of Agriculture forecasts.

It would come in just short of the 2.7m-tonne buy-ins forecast for Iran, although these countries, as structural importers, will not export as much wheat as the UK over the season.

To judge by historical precedent, which shows that UK imports in the July-to-November period an average of 44% of total volumes for the whole marketing year, buy-ins should hit 2.3m-2.4m tonnes over the whole season, said the HGCA, which assists Defra on its cereals estimates.

“However, we are very much not in a typical year, so it is hard to know whether this will hold this time,” HGCA senior analyst Charlotte Garbutt told Agrimoney.com.

“In a year like this, imports may not be linear,” she said.

‘No demand rationing’

The revisions come against a backdrop of apparently resilient demand, with wheat use by millers, starch and ethanol producers rising 9.8% to 2.72m tonnes in July-to-November period.

This figure has been boosted by the Ensus and VIvergo biofuel plants coming onstream, and the poor flour extraction rates the poor-quality wheat is offering mills, forcing them to use more.

Production of animal feedstuffs was, at 1.1m tonnes, 4.9% over the period than a year before.

“Data on usage in the first five months of the season does not yet show significant demand rationing,” the HGCA said.

Wheat vs maize

However, it does reveal a switch in usage in feed from wheat to barley, which is relatively plentiful, and maize (corn) being imported from France and the Ukraine, Ms Garbutt said.

The commodities house said: “New crop Ukrainian maize is already trading into Europe and it could be bought delivered to the UK at about£165 a tonne, far below current UK wheat prices for autumn delivery.

“What’s more, even old crop maize from the Black Sea looks cheap and we are getting to the stage when some feed manufacturers may take the step of switching to more maize, in the knowledge that they would benefit, not just for the rest of this season, but next season as well.”

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However, with wheat prices still strong, farmers maintain an incentive to sow the crop even with a potential yield penalty for missing the ideal window, Strategie Grains said.

‘It is not disastrous’

“People are talking about a problem because we have become used to good sowing conditions, but it is not disastrous,” Strategie Grains’ Laurine Simon told Reuters.

“The gross margins for wheat are decent so that will encourage farmers to sow wheat.”

The group, in its first estimate for the 2013 crop, pegged it at 136m tonnes, up 13m tonnes on this year’s result.

However, the harvest could reach 142m tonnes if yields reached the strong levels of 2008.

The worst case scenario currently being considered was a 121m-tone harvest, factoring in a yield on a par with 2007′s weak result.

Wheat vs rapeseed

The Paris-based group, which last month estimated Europe’s soft wheat area for the 2013 harvest rising by 2.5%, said that seedings prospects had received support from setbacks to oilseed sowings, besides high prices.

The forecast for oilseed area was trimmed by 200,000 hectares to 11.6m hectares, reflecting the inability of growers in countries to plant all their rapeseed, which is an earlier-sown crop than wheat.

Late wheat harvests in areas such as northern France and the UK are believed to have disrupted rapeseed plantings, by eating well into the seeding window.

Oil World last week estimated EU sowings of rapeseed, the bloc’s major oilseed, at 6.55m hectares for the 2013 harvest, up from 6.13m hectares last time.

On Tuesday, the German oilseeds association, Ufop, estimated a sharp revival in the country’s rapeseed area after weather-hit planting seasons in 2011 and 2010.

Source : agrimoney.com

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However, crop emergence, at 49%, remained behind the typical pace, particularly in more northerly areas.

In Nebraska, emergence was 29 points behind average “due to dry soils”, USDA officials said, while the South Dakota crop was lagging by 67 points.

At Commonwealth Bank of Australia, Luke Mathews said: “The slow rate of emergence is of particular concern in the dry northern hard red winter wheat belt.

“These crops will be poorly established leading into winter dormancy.”

‘Dry, windy and warm’

In Kansas, the main US wheat-growing state, the “dry, windy and warm” weather last week which USDA scouts said allowed farmers to “start wrapping up wheat planting” also tested the condition of the emerging crop.

The Kansas crop was rated 40% in “good” or “excellent” condition, down two points on last week’s initial reading, and below the 43% a year ago which was itself considered a historically low number.

While still early in the growing period, and following a season when Kansas achieved a strong wheat yield despite a poor start, October condition data can be a guide to future prospects.

In the previous 11 years, Kansas wheat did not improve post-dormancy compared with its condition at the end of October, research by Australia & New Zealand Bank shows.

At broker Linn Group, Roy Huckabay told Agrimoney.com: “Germination and the need to get that wheat up and growing is importance,” given the imminence of winter.

“We are looking at snow in parts of Kanasas in the next two nights.”

‘Dust veil’

Indeed, the extent of the challenge facing winter wheat seedlings is highlighted by official data showing that 100% of Kansas is in at least moderate drought, with 78% suffering dryness deemed “exceptional” or “extreme”.

“Wheat conditions have grown dry in the main US bread wheat states in October,” Gail Martell at US-based Martell Crop Projections said.

“Some areas in Oklahoma and southern Kansas have received less than 15% of normal rainfall.

“Gusty winds last week whipped up dry fields producing a dust veil from southwest Nebraska through Kansas into Oklahoma.”

Drought areas

In Nebraska and South Dakota too, 100% of area is suffering drought, according to official data, although dryness is easing in some southern states, such as Texas, where the proportion has eased to 62%.

In the Corn Belt, 100% of Iowa, the top corn and soybean state, is in drought, but 63% in Illinois, and 25% in Indiana, where growing conditions were especially poor earlier in the year.

Source : Agrimoney.com

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The poor quantity, and quality, of the UK wheat crop, coupled with demand spurred by the opening of bioethanol capacity, could see imports “rise as far as 2.5m tonnes, or higher”, Jonathan Lane, trading manager at merchant Gleadell said.

“Import amounts continue to rise as millers turn to imports to blend or replace UK supplies,” he said, adding that imports of 2.5m tonnes would be “a figure not seen for many years”, besides one which has constrained milling premiums despite the weak harvest.

It would also appear likely make the UK, unusually, a net wheat importer. UK wheat imports in 2011-12 came in at 867,000 tonnes, well below exports of 2.39m tonnes, customs data show.

‘Mills have been struggling’

The idea of significant imports was also flagged by UK grain traders at a major European commodities house, who highlighted talk over the trouble that mills were having generating flour from a poor quality domestic crop.

While lowering to 70 kilogrammes per hectolitre, from 76 kilogrammes per hectolitre, their hurdle rate for specific weight – a key quality metric – they will take for top grade wheat, mills “have been struggling” with the grain.

They have reportedly been “running flat out for 24 hours a day but still are unable to produce enough flour for their customers due to the very poor extraction rates”, the traders said.

With German milling wheat “available delivered into the northern mills at about the same price as full spec Group 1s, and with consistent quality and specific weights well over 76 kilogrammes per hectolitre, It’s no surprise that millers are turning to this better material”.

Imports from the US?

For Group 3 milling wheat, used in making biscuits, the dearth of supplies may even force millers to turn to US supplies, they said, echoing comments made by US broker Benson Quinn Commodities last month.

“The only alternative is US soft red winter wheat,” the type traded in Chicago, which is “less than £20 tonne above our Group 3 prices delivered into the northern mills”, the traders said.

“Again, with its better quality it may already be a viable option and we have to remember that once the decision is taken, it turns up in cargoes of 25,000 or 50,000 tonnes.”

‘High levels of disease’

The comments came as Defra, the UK farm ministry, in its first estimates for the 2012 harvests warned that “yields for all [major] crops have fallen between 2011 and 2012, with wheat and oilseed rape showing the greatest drops”, after the wettest summer in a century.

In wheat, “yields have been affected by the poor weather, which led to high levels of disease during spring and summer along with low sunlight levels during the grainfill period”.

The wheat yield of 6.7 tonnes per hectare was the “lowest it has been during the last 20 years”, with the harvest pegged at 13.3m tonnes, a 13% decline year on year.

The production figure is in line with a 13.25m-tonne estimate last week from the National Farmers Union, with Strategie Grains on Friday putting the crop at 13.4m tonnes, and the US Department of Agriculture on Thursday putting the crop at 14.0m tonnes.

Cet article UK to see big wheat import as weak crop confirmed est apparu en premier sur WATERFOOD.

In Russia, “soil moisture levels still remain low in some key growing southern areas,” whose drought this year has been a major factor in curtailing exports from a country which typically provides a source of ample competitively-priced grain.

Indeed, the weak exportable surplus of wheat in the former Soviet Union has “strengthened domestic prices of main staple wheat flour in importing countries”, contributing to a gain in world food prices last month.

‘Progressing well’

However, overall Russian sowings of winter wheat, which accounts for some two-thirds of the country’s wheat production, are “progressing well under generally satisfactory weather conditions”, the FAO said, flagging forecast of winter grains area remaining stable at about 16.8m hectares.

In neighbouring Ukraine, “planting got off to an early start, favoured by beneficial rains during [late] August in the majority of grain-producing regions”, the exception being some “key” southern areas, where soil moisture levels remain low.

Winter grain sowings are expected at an “average” level of 8.1m hectares.

In the US, the arrival of “much-needed” rains last month had improved soil conditions, the FAO said, flagging US Department of Agriculture data showing only a small lag in planting progress behind typical levels.

And in the European Union, the world’s biggest wheat producer, planting conditions “are generally favourable”.

‘Attractive option’

The decent conditions boded well for sowings at a time when elevated prices were giving growers a firm incentive to plant wheat, the FAO said.

“Wheat remains an attractive option for producers. Thus, weather permitting, [world] plantings are expected to at least match those of last year.

“This alone could result in a significant increase in next year’s global wheat output, assuming growing conditions return to normal in areas affected by drought in 2012, and satisfactory growing conditions in the other key producing countries.

“Very early indications for wheat crops in 2013 are encouraging,” after a 2012 harvest which the organisation pegged at 663m tonnes, a 5.2% drop year on year.

Area increase?

The comments follow a forecast last week by the International Grains Council that wheat harvested area for next season’s harvests would increase by 2.0% to 223.2m hectares.

“Winter wheat planting for 2013-14 is well underway in the northern hemisphere, and farmers are expected to increase sowings, driven by both firm prices and a recovery from the adverse weather conditions the previous year, notably in the former Soviet Union,” the council said.

Indeed, the IGC forecast a rise in sowings in Russia and Ukraine, as well as in Argentina, where plantings for 2012-13 fell to a multi-decade low as farmers switched to barley, for which the country’s export restrictions are not as severe, so opening up the potential for better returns.

‘Welcome rains’

Separately, Agritel on Thursday flagged improved sowing conditions in France, the EU’s top wheat producer, after an unfavourably dry period during the seeding window for rapeseed, which is planted earlier.

“The current rains in the northern part of France are warmly welcomed, with the beginning of winter wheat seeding,” the Paris-based consultancy said.

“These rains will partially offset the lack of rainfall observed for rapeseed sowing.”

In Russia, farm operator Ros Agro said on Wednesday it had completed sowing nearly 100,000 hectares of winter wheat.

SOURCE : Agrimoney.com

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Inventories to slump

In fact, Goldman forecast US wheat inventories dropping in 2012-13 to their lowest since 2007-08, factoring in Friday’s data and the prospect of enhanced export demand following drought damage to the Russian harvest.

“Given the tightening of the global wheat balance, we expect US wheat exports will be larger than currently expected by the USDA,” Mr Courvalin said, foreseeing inventories closing the season at 522m bushels, a drop of nearly 30%, and well below the current official US number.

And wheat futures were vulnerable to a spike if the trend of disappointing harvests continues, Goldman said, amid concerns over rain damage to the Argentine crop, and a drought hit to Australia’s.

“Another wheat crop failure would likely push wheat prices sharply higher and above corn prices to limit animal feed demand in the face of inelastic human food use,” he said.

“This in turn would likely shift wheat to being the leader of the grain complex.”

‘Prices will need to set new highs’

The bank forecast higher corn prices ahead too following Friday’s data showing US inventories of the grain lower than forecast, and stood by a forecast of $9.00-a-bushel corn on a three-month horizon.

“We reiterate our view that corn prices will need to set new highs and trade well above the current forward curve,” Mr Courvalin said, noting that US feed demand “remained remarkably strong” over the summer.

“The underlying level of corn feed demand is even more remarkable when taking into account the record high wheat feed demand implied by Friday’s low wheat stocks.”

However, the bank cut its forecast for corn prices on a 12-month horizon to $6.50 a bushel, foreseeing a “significant supply response” next year to the current high values, and also foreseeing some threat to the market from a weak pace of US exports and worsened dynamics in ethanol.

Stable US ethanol inventories, despite a drop in production, “suggests that exports have likely collapsed over the past few months, with imports of Brazilian ethanol up strongly as well.

“Absent a pick-up in net exports, we believe that current high ethanol inventories create downside risk to weekly ethanol production,” and with it pressure on prices.

‘Futures will recover’

Goldman also cut its forecast for soybean futures, flagging the boost to ideas in US supplies from teh USDA’s report on Friday, which also raised the estimate for last year’s domestic harvest.

With recent yields beating expectations too, “recent developments point to a slightly less severe soybean deficit than previously expected”, Mr Courvalin said.

However, with Chinese demand remaining strong, “current prices are not reflective of the tight soybean fundamentals, and we expect that prices will recover in coming months with US soybean export sales and shipments the key driver to this price rally”.

While soybean futures “will likely underperform” corn in the near-term, prices will still stand at $18.75 a bushel on a three-month horizon, eclipsing by some $0.80 the current record price.

source: Agrimoney.com

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Corn nudged higher, continuing to gain support from Friday’s US Department of Agriculture data showing domestic stocks of the grain far lower than expected as of September 1, the end of 2011-12, and implying more resilient use than had been expected in the face of high prices.

But soybeans and wheat extended losses, given no support by a mediocre start on external markets, where traders attempted to account for Monday’s mixed manufacturing data – strong for the US but weak for China –besides factoring in a cut in Australian interest rates.

And this against trade thinned by holidays in China, Hong Kong and India.

‘Greater confidence in yield reports’

Soybeanscontinued to be pressured by the record pace of US harvest, confirmed in USDA data overnight which showed 41% of the crop cut as of Sunday, up 19 points in a week.

Furthermore, there is continued talk of yields beating poor expectations, and the prospect of an upgrade of potentially 3 bushels an acre to the USDA estimate in the next Wasde crop report, on October 11.

“We now have enough row crops harvest completed to place greater confidence in row crop yield reports to date—essentially widely variable for corn, with upside surprise unlikely, and much better-than-expected for soybeans,” Richard Feltes at RJ O’Brien said.

Seasonal low imminent?

Sure, there is continued evidence of strong demand too, with export data on Monday showing the US shipped 41.7m bushels in the latest week, largely to China, and taking total shipments for the first three weeks of 2012-13 to 76.9m bushels – well ahead of the 45.8m bushels a year before.

And, historically, the first week of October is often one when soybean declines fostered by harvest pressure bottom out.

“This is normally the week to probe the long side of soybeans or reown sales,” Mike Mawdsley at Market 1 said.

“Traders are wary of higher production, however,” he added, and Chicago’s November soybean lot indeed dropped 0.5 cents to $15.59 ¾ a bushel as of 09:30 UK time (03:30 Chicago time), if having recovered from a three-month low set earlier, for a spot contract, of $15.51 a bushel.

‘Wheat expensive compared to corn’

Wheat fared worse, shedding 0.7% to $8.78 a bushel for December delivery, extending a decline attributed in part to profit-taking on a 5% jump in prices on Friday.

Then, US stocks of wheat, as well as corn, were shown smaller than expected, fostering the price jump.

But prices have fallen since, in part on spreads with corn, with funds believed to be taking out “long corn-short wheat bets”, noting the relative prices of the two grains.

“The consensus is that wheat is expensive compared to corn, which I couldn’t disagree with when the Chicago December wheat contract was trading at a $1.40-1.50-a-bushel premium to December corn,” Brian Henry at broker Benson Quinn Commodities said.

“I would not be surprised to see this relationship tighten more from the current levels, but I would be surprised to see this spread trade inside $1.00 a bushel in the near future.”

‘Ongoing yield concerns’

Furthermore, values in Russia’s interior have eased some $10 a tonne in the last week, while Ikar, the Moscow-based consultancy, edged up its estimate for the domestic wheat harvest by 1m tonnes to 40m tonnes – both stoking concerns that the country might have a last card to play on the export market.

And there has been welcome rain in parts of Australia too, although how much a crop saver the precipitation has been is open to debate.

“Crop production potentials from central New South Wales to southern Queensland benefitted from the weekend’s rain,” Luke Mathews at Commonwealth Bank of Australia said.

“However, the meaningful rain missed the Riverina and Victoria-South Australia Mallee, resulting in ongoing yield concerns.”

He added: “No decent rain is forecast for the Australian grain belt for the remainder of this week.”

Meanwhile, parts of Argentina have received too much rain, stoking concerns for wheat, besides potentially delaying soybean sowings.

‘More compelling story’

Corn benefited from the spreading from wheat, which also has a seasonal basis, with RJ O’Brien’s Richard Feltes quoting Moore Research findings that the “wheat/corn seasonal tends to peak out in October before crashing lower Halloween onward”.

“While US and global stocks of both commodities are tight, we think corn has the more compelling story near term,” he added, noting the imperative in corn to ration further domestic demand, which accounts for the great majority of use, even if exports are showing a rapid decline.

Indeed, Brazil on Monday said that its corn exports set a record 3.15m tonnes last month, as it scooped up demand from importers deterred from US supplies by high prices.

Interestingly, Brazilian (cane-based) ethanol shipments hit 452.7m litres, their strongest since July 2009, tying in with Goldman Sachs observations on declining US shipments of (corn-based) ethanol, and potentially a sign of rationing pressure in that segment too.

December corn added 0.2% to $7.58 a bushel.

Slump continues

Outside Chicago, Kuala Lumpur palm oil continued its astonishing decline, dropping to 2,365 ringgit a tonne, its lowest since July 2010, before recovering some ground to 2,371 ringgit a tonne, a drop of 3.8% on the day.

The vegetable oil has now lost 23% of its value in the last month, sapped by concerns over soft demand for Malaysian palm exports at a time when the country’s production is ramping up to its seasonal high.

In New York, raw sugar investors were cautious over adding more gains after the sweetener’s recent run, and awaiting more signals to indicate that short-covering is continuing.

The March contract added 0.1% to 21.15 cents a pound.

“It appears the market remains supported by last week’s news that India may import raw sugar because of price differentials,” CBA’s Luke Mathews added.

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