(Agrimoney) – Row crops lead grains to their second day of gains, as concerns over moisture levels in the United States Midwest and Plains regions continued to prop up markets today.
A tropical storm, which made landfall in Texas yesterday, is headed for the United States Corn Belt.
US Commodities warned that “wet weather from Tropical Storm Bill is delaying the dry out,” adding that “the southern grain belt and the eastern Midwest have a wet forecast and weather”.
Darell Holaday of Country Futures “The concerns about wet conditions continues to fuel the buying”.
Midwestern rains also threatened grain transport, as high waters prevented freight loading along the Mississippi.
However, in some areas the weather concerns may be easing.
Commerzbank said that “there appears to be an end in sight to the in some cases heavy rain that has been falling in some parts of the Great Plains, which should then allow the harvest to proceed smoothly in the affected regions of Texas, Oklahoma and Kansas”.
Chinese dryness
Meanwhile, there are other weather concerns in China.
“Dryness continues to build across the North China Plain, where very little rainfall has fallen over the past month” noted MDA weather Services.
The areas affected include key soy and corn growing regions.
Ethanol demand falls
The bullish weather news for corn outweighed some weaker data on ethanol.
A weekly status report from the US energy authority revealed that ethanol production was down 1.2%, or 12,000 barrels a day, to 980,000 barrels a day since last week, while stocks were up 472,000 barrels to 20.72m barrels, suggesting thinning demand for the corn-derived biofuel.
July ethanol was down 0.8% at $1.470 a gallon.
Corn closed the day up 1.4% at $3.59 a bushel.
Soybeans finished up 1.0% at $9.67 a bushel.
Fed press conference
Richard Feltes of RJ O’Brien also noted support for grains from short covering, ahead of an afternoon press conference with chairman of the US Federal Reserve Janet Yellen, which was expected to tease the prospect of higher interest rates this year.
The prospect of higher US interest rates has been supportive for the greenback, which means lower dollar-denominated commodity prices.
Shortly after 2pm Washington time the Fed released a statement suggesting that the economy was near the point where rates would be raised.
But the dollar dipped as the outside prospect of an immediate rate rise was ruled out, leaving it down 0.46% against a basket of currencies.
EU rapeseed and wheat get a boost from dryness
EU rapeseed got a boost from a cut to harvest expectations by Germany’s farmer co-operative, after some unwanted dryness in Western Europe.
November rapeseed, the most traded contract was up 1.2% at EUR370 a tonne.
German producers also cut wheat expectations.
Matif wheat closed up 0.85% at EUR178.25 a tonne.
“Excess moisture”
In the US, wheat rose with row crops, although gains were more muted.
CHS Hedging said that “winter wheat harvest in the central U.S. is seeing delays due to rain and excess moisture”.
“Mud is causing challenges for some producers as they struggle to get mature wheat out of the fields.”
July Chicago wheat finished up 0.66% at $4.91¼ a bushel.
Sugar finds a floor
Softs showed less strength than grains today, although sugar finally found a bottom, as it climbed back from a six year low.
“Weather in CS Brazil has been good for harvesting recently,” noted Nick Penney, senior sugar trader at Sucden.
October ICE sugar, the most widely trade contract, closed up 1.1% at 11.81 cents a pound.
Vietnam supply squeeze
Arabica fell today, with September New York coffee closing down 2.0% at 129.35 cents a pound.
The robusta market was also overall bearish today, but the front end contract lifted to pull the market into backwardation over concerns about a short-term supply squeeze caused by farmer hoarding in main grower Vietnam.
July robusta was up 0.8% to $1808 a tonne, while the September contract closed down by 0.2% at $1751 a tonne.
Cocoa stumbles
Cocoa also stumbled, after a three-day rally that bought it to an eight month high yesterday, following rain and disease concerns in West Africa. New York cocoa for July was down 0.4% at $3220 a tonne.
December cotton edged down by 0.1% to 64.88 cents a pound.
