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Morning markets: grain prices jump as prayers go unanswered
If US farmers prayed over Easter for better weather, it's not obvious their plea was answered.
For
spring sown crops, notably corn, "the issue last week was whether or
not there was going to be an extended dry window as we moved to the
first 10-12 days of May," so allowing for speedier plantings, David
Tolleris at WxRisk.com said.
"The first 10 days of May is not
going to be dry. Of course one could argue that the first 10-12 days of
May 20111 do look drier than what most areas have seen in April, and
that would be correct."
Furthermore,
a so-called Cas, or climate soil moisture analogue, weather model came
out over the weekend, "showing large areas of temperatures remaining
below normal over all of the upper Plains and Midwest and rainfall well
above Normal for all of May and June", Mr Tolleris said.
Russian delays
Meanwhile, it looks to remain dry for the US hard red winter wheat areas where a lack of moisture is the problem.
While
one model has a system bringing significant rain around May 8-9 into
Kansas and Oklahoma, where winter wheat is suffering, "the model has
probably shifted this low too far to the south", he said.
The
forecasts lowered further expectations of bin-busting crops to ease
concerns over food supplies, and sent grain prices firmly higher.
And
it is not as if all is hunky dory for crops abroad too, with a late
spring limiting to 1.03m hectares spring grain sowings by Russian
farmers, down 40% year on year, and cutting hopes of the country being
able to make up for drought-depressed autumn seedings.
Minneapolis
spring wheat for May added 2.8% to $9.87 ½ a bushel for the best-traded
July contract, with the Kansas (hard red winter wheat) July lot up 2.5%
at $9.66 ½ a bushel, as of 07:40 GMT (08:40 UK time).
Chicago
wheat jumped to a two-month high of $8.21 ¾ before easing back to $8.19
¼ a bushel for May, up 2.5% on the day. The July lot was 2.4% higher at
$8.54 ½ a bushel.
Key date
And corn wasn't too far behind, adding 2.1% to $7.52 ¾ a bushel for May and the same to $7.60 ¼ a bushel for July.
The
new crop December lot gained 1.5% to $6.75 ½ a bushel, with US
Department of Agriculture data released after the close of play
expected to reveal further weak progress on American corn sowings.
Jon Michalscheck at Benson Quinn Commodities said: "A
year ago as of April 25 corn was 50% planted with 22% being the average.
"This
year we will be lucky to be 10%+ planted and may struggle to be 50%
planted by the week of May 8 based on the current weather forecast."
That's an important time of year as US corn sown after May 10 has, as a rule of thumb, a lower yield potential.
'Record highs'
At
Phillip Futures, Ker Chung Yang added: "If the planting delays persist,
it can push up near-month corn futures in Chicago towards record highs
of $8 a bushel.
"Inventories in the US, the world's largest exporter, are already running low."
Meanwhile,
soybeans continued to lag, gaining some spillover strength from grains,
but still depressed by signs of weak Chinese demand.
Chicago's
July lot was unchanged at $13.89 ¾ a bushel. Meanwhile, the prospect of
sowing delays prompting farmers to switch from corn to soybeans, which
are later planted, left the new crop November lot down 0.1% at $13.80 ¾
a bushel.
Rubber drop
Elsewhere,
rubber had a poor day in Tokyo, with the October lot, in its opening
day as the benchmark contract, tumbling 5.3% from its opening price to
395.4 yen.
"Investors are awaiting clearer cues on this year's
production after the wintering season as Thai production may pick up
after last week's Songkran break and recent floods," Mr Ker said.
Thailand is the top producer of the tyre ingredient.
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