(Agrimoney) – Wheat futures hit a new six-year low on Tuesday, after US government data showed winter wheat crops coming out of dormancy in good condition, while corn and soybean prices are still facing the prospect of strong South American exports.
True, there was little support on the macro side either, as the Chinese purchasing managers index, an influential survey of industrial sentiment, came in negative for the seventh month in a row, indicating shrinking demand at the world’s top commodity buyer.
The dollar hit one-month highs against a basket of world currencies, bringing pressure to bear on dollar-denominated commodities, although it trimmed gains a little, trading up 0.2% in afternoon deals.
Good condition
Data released by the US Department of Agriculture late on Monday showed condition in top-ranked winter wheat grower Kansas improving month-on-month.
Conditions were also improved in Nebraska and South Dakota, while in Oklahoma, traditionally the second-ranked grower conditions were down, but still well above last year’s level.
US wheat futures extended losses on the news.
Kansas, Chicago down
Front-month March wheat futures in Chicago were down 1.5%, at $4.38 ½ a bushel, their lowest level since 2010.
And the May contract, which is the most widely traded, was down 1.5%, at a contract low of $4.46 a tonne.
In Kansas hard red winter wheat futures were down as well.
May Kansas wheat lost 1.6%, falling to $4.50 a bushel, the weakest close for the contract, although above a low touched last week.
Russian sell-off
Russian wheat prices are falling, due to stiff competition from European product.
Black Sea prices for Russian wheat with 12.5 percent protein content were down $3.5 a tonne from last week, at $177.5 Russian agricultural consultancy IKAR said in a note.
SovEcon saw Black Sea wheat at $180.5 a tonne, down $1 a tonne.
In Paris, front-month wheat futures found new 6-year lows.
And the March contract, the most widely traded, closed down 1.0%, at E153 a tonne.
South American prospects
Meanwhile prospects for corn and soybean supplies from South America remain strong.
Analyst Dr Michael Cordonnier raised his forecast for Braziliansoybean production by 1m tonnes to 100m tonne.
AgRural estimated the Brazilian soybean harvest is now 33% complete, against 29% last year.
And new exports have got off to a rapid start this season.
Data from Brazil’s trade ministry showed February soybean exports at 2.04m tonnes in February, compared to 0.39m tonnes in January and 0.87m tonnes a year ago.
Tariff threat recedes
And those shipments are less likely to be slowed down, as the prospect of soybean and corn tariffs on exports from key Brazilian growing states recedes.
A U-turn by the state governor of Goias, in central Brazil means that grains for international shipment will remain exempt from state export tariffs, which is likely to discourage other state government from enacting similar policies.
“Other states in Brazil had contemplated imposing the same tax on exported grain, but the decision of the governor of Goias to suspend any consideration of new taxes probably means that other Brazilian states will not move forward with new taxes on grain exports,” said Dr Cordonnier.
Argentine currency falls
Dr Cordonnier lifted ideas for Argentine soybean production as well, by 1m tonnes to 60m tonnes.
Argentina reached a $4.7bn settlement with its outstanding debtors from a past default, opening up the prospect of future borrowing, and pushing the Argentine peso to a new all-time low of 15.83 pesos to the dollar.
The lower currency incentivises exports.
May soybean futures closed down 0.3%, at $8.58 a bushel.
Weak sowings
Still, there was a touch of support for corn from Europe.
French grain corn sowings will fall 6% this year, thanks to low prices, the grower’s group AGPM said.
The fall would come on the back of a 5.6% drop in 2015.
French corn sowings will start at the end of this month.
May corn futures finished down 0.3%, at $3.55 ¾ a bushel.
Slumping cotton
Cotton futures continued to slump, amid a very weak outlook for consumption.
May cotton futures were down 0.7%, to 56.11 cents a pound.
This marks the lowest close in 6 years, although is still above the lows plumbed in the previous session.
Brazil weighs on coffee as well
Arabica coffee neared a two year low, pressured by heavy supplies from top grower Brazil.
Brazil exported 2.67m 60-kg bags of coffee in February, up from 2.49m bags in January and 2.51m bags a year ago.
May arabica coffee settled down 0.3 percent, at 114.75 cents a pound, after recovering from a session low of 113.40, a low only plumbed in one session in the last two years.
May robusta coffee settled down 2.6%, at $1,377 a tonne.
May raw sugar pared early gains, falling back from six-month high of 14.50 cents a pound, to end the session up 0.2%, at 14.39 cents a pound.
