There has been some talk on ag markets that, in traders'
parlanace the bears need feeding, with fresh price-negative news, if grain
prices are to continue their downward slide.
The bears did not get much of a meal on Wednesday, allowing
futures which were already pricing in a stack of strong crop supply news to
stage a recovery.
OK, there were some bearish-looking snippets.
Russia, for instance, talked of an imminent lifting of its wheat export tax, with its crop
prospects for this year now looking much better, reducing the threat of a
supply squeeze.
"We are aiming to ensure that the duty ceases to work in its
current form in the very near future as there is no need to keep it under
current market conditions," said Arkady Dvorkovich, Russian deputy prime
minister.
But the idea of the tax ending before the stated target of
July 1 was hardly a surprise for many investors, who were talking a couple of
weeks ago about the potential for an earlier finish.
'Farmers done
planting'
And yes, the weather outlook remains helpful as far as US spring
sowings go.
"Continued drier weather in south eastern Midwest areas through
the weekend will favour corn and soybean planting," said weather service
MDA.
CHS Hedging said: "Weather remains clear and open for corn
planting this week," although there is "moisture starting to show up in
early-next-week forecasts".
Darrell Holaday at Country Futures noted "more and more
reports of corn producers being done planting corn in Iowa, Minnesota, Illinois
and South Dakota".
Dollar drops
However, there was not enough new and negative in the
headlines to counter a big positive for prices in a tumbling dollar.
The greenback lost 1.0% against a basket of currencies after
official data showed the US economy growing at an annualised pace of 0.2% in
the January-to-March quarter well below the 1% figure expected, and the 2.2%
rate recorded for the October-to-December period.
A weaker dollar improves the affordability of
dollar-denominated exports, including many commodities.
Indeed, the CRB commodities index added 1.2% for its best
close in two months.
'Huge speculative
short'
Some grains did even better, with Chicago soft red winter wheat futures rising 1.5% to $4.83 a
bushel for July delivery, closing nearly at the day high, as the less downbeat
mood encouraged hedge funds to take profits on some of their hefty net short
position in the grain.
Kansas City hard red winter wheat, in which hedge funds also
have an unusually large net short position, gained too, ending up 1.5% at $5.10
a bushel, despite expectations of rains for southern US Plains growing areas .
"The huge speculative short positions in Chicago and Kansas
City could limit further price pressure at this time," CHS noted earlier.
The market is also beginning to focus on next week's Wheat
Quality Council tour of Kansas, the top wheat growing state, amid talk of pest
and disease replacing dryness as a yield threat.
'Lack of fresh
bearish stories'
Benson Quinn Commodities said: "The lack of fresh bearish
stories for corn and wheat has the
grains bouncing this morning on technically oversold conditions."
And indeed corn gained too, adding 0.8% to $3.67 a bushel
for July, despite the improved yield prospects from the accelerated sowings
expected this week.
On a more positive note, in a sign of the depressed prices,
"the trade is not expecting any corn deliveries against the May contract
tonight", as the expiry process begins, CHS Hedging said.
(It has to be noted that not all commentators were so
sanguine, with Fintec Group noting some ideas of "as many as 1,000" corn
contracts being delivered.)
The ethanol market was a minor positive in gaining 0.5% to $1.622
a gallon for June, after data showed US stocks of the biofuel tumbling last
week by 945,000 barrels to 20.8m barrels.
That was in part down to lower production, which dropped 9,000
barrels a day to 921,000 barrels a day.
Strike support
Soybeans,
meanwhile, gained 1.1% to $9.88 a bushel for July, ending back above its 50-day
moving average for the first time in four weeks, amid greater consensus of a
lack of deliveries against the expiring May lot.
The trade is expecting deliveries against 0-50 contracts,
Fintec said.
Furthermore, the latest South American logistical hiccup
helped, with a strike by the captains of smaller boats which ease access for big
ships at Argentina's main grains port of Rosario.
"A potential dock strike in Argentina may keep soymeal premiums elevated in the short
run," CHS Hedging said, with Argentina the top exporter of the feed ingredient.
Soymeal itself gained 1.6% to $322.40 a short ton for July,
closing back over its 40-day moving average for the first time in four weeks.
There is talk of a strike by Argentine crush workers too.
'Very good cane crop'
Among soft commodities, cotton
for July surfed dollar weakness too, adding 1.1% to 67.09 cents a pound, a
fresh seven-month closing high.
The fibre was helped too by ideas that weekly US export sales
data on Thursday may show a decent figure.
However, many soft commodities fared less well, with raw sugar for May easing 0.6% to 13.09
cents a pound for May delivery, as investors factored in the accelerating
Brazilian Centre South cane crush.
"The Brazil harvest is fully underway now and they appear to
have a very good sugar cane crop," Jack Scoville at Price Futures said.
"There are still plenty of other sources for sugar around
the world," he added, noting that "South East Asian production prospects remain
very good.
"But the weather will be monitored as El Nino has formed."
There is also much debate about the extent of open interest
still remaining in the May lot, which expires on Thursday, with 57,780 lots
still alive as of the end of the last session, equivalent to more than 2.9m
tonnes of sugar, and seen as a sign of a large delivery to come.
Whether that is bullish or bearish news