(Agrimoney) – Wheat markets bounced back on a touch of bargain buying on Wednesday, while row crop markets remain under pressure from improving South American weather and ample ethanol stocks.
Markets are still absorbing what was a broadly bearish Wasde report on Tuesday.
US Commodities forecast grain prices to “grind lower into sprin”.
“Only adverse weather can alter the trend,” it added.
Outside markets steady
The latest bout of turbulence in outside markets seems to have eased for the time being, as European equity markets steadied.
In Frankfurt the Dax rose 1.6%, as troubled banking giant Deutsche Bank announced it was drawing down its debt, while the FTSE 100 rose 0.7% of Tuesday’s 3-year lows.
US stocks got some help in the afternoon, as Federal Reserve chair Janet Yellen issued a downbeat assessment of the US economy, which suggests there will be no more monetary tightening in the near futures.
Oil markets trimmed some of Tuesday’s sharp losses, with April Brent crude futures up 2.4% in afternoon deals, at $31.06 a barrel.
Argentine rains
Prospects for row crops in Argentina continue to improve.
“Argentina soybeans and corn have received heavy soaking rain in recent days, ending a month-long stretch of dryness,” said forecaster Gail Martell.
“The stormy weather is not finished, the forecast calling for more heavy rainfall in the week ahead,” Ms Martell added.
Soybeans in particular should benefit from this rain, Ms Martell said, as they are currently in their pod-filling stage, when rainfall can heavily influence yields.
“Additional rainfall would further improve the soybean yield,” she said.
Russian restrictions
Russia announced that it would be restricting soybean and corn imports from the US, in a move that the agriculture minister ascribed to “unacceptable” levels of contamination, rather than political motives.
Russia imports only a negligible amount of US grains.
March soybeans fell 0.1% to finish at $8.62 ¼ a bushel.
Ethanol stocks hit new highs
Ethanol futures came under pressure, as data showed record US inventories.
The US Energy Information Agency reported weekly stocks of the corn-based biofuel at an all-time high of 22.96m barrels.
This is up 594,000 barrels from last week, despite an only modest increase in production, by 10,000 barrels a day to 969,000 barrels a day.
“Supplies are backing up as the huge supply of cheap gasoline makes discretionary blending obsolete,” said Tregg Cronin, of Halo Commodities.
March ethanol futures were down 1.5%, at $1.395 a gallon.
March corn futures fell 0.2%, to $3.60 ¼ a bushel.
North African rains
Rains should finally reach North Africa next week, which will help the parched wheat crop there.
“Rains are expectedly to finally become widespread throughout wheat areas Sunday through Tuesday,” said Kyle Tapley, of MDA Weather Services.
Mr Tapley said the showers “should be heavy enough in most areas to significantly improve soil moisture”.
French prospects trimmed… a little
The French farm ministry trimmed its forecasts for domestic winter wheat sowings for this season, albeit still at record levels.
Ideas for soft wheat plantings were trimmed by 21,000 hectares to 5.20m hectares, and for durum by 3,000 hectares to 351,000 hectares.
Still, winter crop sowings had been made “generally in good conditions”, the ministry said.
Paris wheat futures for March fell to a five-month low of E149.00 a tonne on Wednesday.
But a weakening of the Euro, support from US markets, and a touch of bargain buying helped prices end up 1.7% on the day, at E153.50 a tonne.
March Chicago wheat prices finished up 0.6%, at $4.61 ¼ a bushel.
Sugar pares losses
Raw sugar futures pared early losses, bouncing off the ten-day moving average at 13.15 cents a pound.
“The market overall has calmed down a bit, although occasional waves of liquidation appear,” noted Nick Penney, senior trader at Sucden Financial.
March raw sugar futures settled down 0.1%, at 13.38 cents a pound.
Coffee market on holiday
Coffee markets were stable, with little producer selling due to holiday’s in top growing countries.
Sellers in Brazil, the world’s top arabica grower, have been away for carnival.
March arabica futures closed sideways at 114.75 a pound.
And Vietnam, the world’s top robusta producer, is celebrating the Tet holiday this week.
March robusta coffee settled 0.4 percent, at $1,392 per tonne.
But March cotton futures edged up from 1-year lows, to finish up 0.4% at 58.88 cents a pound.
