Wheat futures touched 1-month highs on Monday, helped by lower Canadian plantings, fears of European winterkill, and the ongoing threat of Russian export tariffs.
Macro markets painted a mixed picture, as the Chinese Stock Exchange plunged past its summer bottom, to a 13-month low overnight.
But oil futures rallied, with March Brent crude futures up 4.1% at $31.75 a barrel as Chicago markets closed, and the Dow Jones and the FTSE 100 were up on the day.
Prospects for wheat in Europe and the former Soviet Union are under threat, after a sharp cold snap.
A crop report by Mars, the EU crop monitoring agency, released on Monday, warned of Europe’s potential freeze damage in Eastern Europe, particularly Poland.
“Wheat areas not protected by a thick blanket of snow may be subject to freeze damage,” warned forecaster Gail Martell.
The mild weather in autumn and early winter may have increased the risk to crops.
“Prolonged exposure to mild temperatures in December were not favourable for wheat “hardening”, the process by which wheat builds up resistance to cold,” she said.
Uncertainty over prospects for Egyptian wheat demand were reignited, as the country’s agriculture minister insisted that no wheat containing the ergot fungus.
In December a French wheat cargo for Egypt, the world’s top wheat importer, was stopped by quarantine after the fungus was detected.
The agriculture minister’s position differs from that of Gasc, the state grain buyer, which allows up to 0.05% ergot contamination in purchases.
On Tuesday Gasc said it had yet to be notified on the matter.
But the prospect of wheat export tariffs in Russia continues to weigh.
“Once again, there is a strong uncertainty about the decision of Russian authorities on export tax applied to wheat sale,” said Agritel.
The Russian agriculture minister said on Monday that measures to slow exports were underway.
The measures would be aimed at protecting Russian consumers from price inflation, triggered by the falling rouble.
“If it happens, the pace of shipment should be weakened,” Agritel said.
Paris wheat futures rose 1.1% to finish at E168.75 a tonne.
Canadian sowings to drop
Canada’s farmers will cut spring wheat sowings, excluding durum, the country’s farm ministry said, forecasting a 2% drop from 6.88m hectares sown last year, to a five-year low.
Minneapolis March spring wheat futures rose 0.8% to 5.04 cents a bushel.
Chicago March wheat futures rose 0.6% to 4.84 ѕ cents a bushel.
Canola to rise
The farm ministry also forecast Canadian canola sowings to rise by 4% to 8.44m hectares, due to attractive returns.
March canola futures closed down 1.0%, at Can$477.40 a tonne.
The movement sapped strength from other oilseeds.
March soybeans futures fell 0.5% to 8.76 ј cents a bushel.
But in the US and North America, corn sowings are set to rise, at the expense of soybeans, the chemical and agricultural company DuPont said.
“As farmers look to relative economics between crop alternatives, we expect a slight year-over-year uptick in Brazil safrinha and North America corn area, provided weather cooperates during planting,” said DuPont.
“Our order book in North America suggests a modest improvement in corn demand at the expense of soybeans in a highly competitive seed market,” the company added.
March corn closed down 0.3% at 477.40 cents a bushel.
Low raw appetite
Sugar markets weakened, as the size of the speculator net-long position revealed on Friday continues to weigh.
“It seems nearby demand for raws is slow and added to the macro considerations, is causing some speculators to re-assess,” said Nick Penney, senior trader at Sucden Financial.
“With a month left before March New York expiry (and position limits being imposed in 2 weeks’ time) traders may be pre-empting the Fund roll, assuming most of the net long is in the March position,” he added.
March raw sugar settled down 0.6%, at 14.02 cents a pound.
Slow coffee markets
Coffee futures were largely unchanged, as the prospect of increased selling from Vietnam kept a cap on robusta prices.
The country’s agriculture ministry forecast January exports at 149,000 tonnes, up 8% year-on-year.
Jack Scoville, of Price Futures, noted that buying interest was muted.
“There is some fill in-demand around and some increased interest in higher end coffees, but no one is showing much interest in the lower grades,” he said.
March robusta futures settled up 0.1%, at $1,390 a tonne.
March arabica futures settled up 0.2 percent, at $1.167 a pound.
Cotton futures touched three-month lows, pressured by the weakness in the Chinese stock market.
But prices for the fibre trimmed losses later in the day.
March cotton futures in New York ended down 0.3% at 61.41 cents a pound.
(Source – http://www.agrimoney.com/marketreport/pm-markets-wheat-futures-extend-rally-corn-soybeans-ease–3474.html)