21st Jan 2013, by Agrimoney
OK, it was hardly the busiest day for agricultural commodities, with US markets closed for the Martin Luther Day holiday.
But crops' mixed performance on Asian markets - where grains and sugar for instance eased on Chinese markets after weak December trade data- gave way to a firmer session in Europe.
In fact, risk assets broadly enjoyed gains, helped by the improved sentiment over Chinese and US economies, the world's two biggest, and the close of the S&P 500 share index on Friday at a five-year high.
London shares, as measured by the FTSE 100 index, added 0.4% on Monday to reach their highest close since mid-2008, with the Paris Cac index and Frankfurt's Dax also ending higher.
'Harmful to crops'
But there were extra reasons for grains and oilseeds to gain, such as the lingering concerns over South American weather, and its impact on corn and soybean crops.
WxRisk.com's latest outlook suggests further rains over central Brazil, where moisture is getting in the way of the early harvest, and dryness in the south and north east of the country, and Argentina, where precipitation is wanted.
"What is distinctly noticeable" from modelling "is that again south east Brazil and most of northern and eastern Argentina stays quite dry whereas large portions of central and east central Brazil quite wet.
"This sort of moisture over portions of Brazil will probably not be beneficial and certainly the dryness if the continues over south east Brazil will be harmful to their crops/ grains."
'Still exposed'
Weather continues to be an issue in the former Soviet Union too, where temperatures are expected to drop below 10 degrees Celsius again this week.
"Snow fall has started again in the country's west side, which should limit damage on winter crop production," consultancy Agritel said.
"But, in the east, winter crop in Dnepropetrovsk's oblasts, Donestsk and Lugans are still exposed due to the lack of snow."
Export competitiveness
Furthermore, there is the extra competitiveness to European grains gained from the better performance of US peers in the last few days, since the US Department of Agriculture boosted domestic prices by cutting forecasts for US corn and wheat stocks at the close of 2012-13.
OK, the United Arab Emirates on Monday followed Tunisia in buying (a small quantity of) wheat from optional origin.
But prices certainly "gives attraction to" European grain as the final choice, Agritel said.
Corn vs wheat
Paris wheat for March added 1.4% to E251.50 a tonne, while rapeseed for February edged 0.5% higher to E466.50 a tonne, gaining strength from the concerns over fellow oilseed soybeans.
And London wheat for May gained 1.2% to £217.65 a tonne, amid continuing talk of import needs after last year's poor harvest, and with UK milling wheat at a small discount to the German supplies which mills have been looking on as a replacement.
However, traders at a major European commodities house cautioned over the threat to UK wheat in feed use posed by corn.
"New crop Ukrainian corn is already trading into Europe and it could be bought delivered to the UK at about £165 a tonne, far below current UK wheat prices for autumn delivery," the traders said.
"What's more, even old crop maize from the Black Sea looks cheap and we are getting to the stage when some feed manufacturers may take the step of switching to more corn, in the knowledge that they would benefit, not just for the rest of this season, but next season as well."
OK, it was hardly the busiest day for agricultural commodities, with US markets closed for the Martin Luther Day holiday.
But crops' mixed performance on Asian markets - where grains and sugar for instance eased on Chinese markets after weak December trade data- gave way to a firmer session in Europe.
In fact, risk assets broadly enjoyed gains, helped by the improved sentiment over Chinese and US economies, the world's two biggest, and the close of the S&P 500 share index on Friday at a five-year high.
London shares, as measured by the FTSE 100 index, added 0.4% on Monday to reach their highest close since mid-2008, with the Paris Cac index and Frankfurt's Dax also ending higher.
'Harmful to crops'
But there were extra reasons for grains and oilseeds to gain, such as the lingering concerns over South American weather, and its impact on corn and soybean crops.
WxRisk.com's latest outlook suggests further rains over central Brazil, where moisture is getting in the way of the early harvest, and dryness in the south and north east of the country, and Argentina, where precipitation is wanted.
"What is distinctly noticeable" from modelling "is that again south east Brazil and most of northern and eastern Argentina stays quite dry whereas large portions of central and east central Brazil quite wet.
"This sort of moisture over portions of Brazil will probably not be beneficial and certainly the dryness if the continues over south east Brazil will be harmful to their crops/ grains."
'Still exposed'
Weather continues to be an issue in the former Soviet Union too, where temperatures are expected to drop below 10 degrees Celsius again this week.
"Snow fall has started again in the country's west side, which should limit damage on winter crop production," consultancy Agritel said.
"But, in the east, winter crop in Dnepropetrovsk's oblasts, Donestsk and Lugans are still exposed due to the lack of snow."
Export competitiveness
Furthermore, there is the extra competitiveness to European grains gained from the better performance of US peers in the last few days, since the US Department of Agriculture boosted domestic prices by cutting forecasts for US corn and wheat stocks at the close of 2012-13.
OK, the United Arab Emirates on Monday followed Tunisia in buying (a small quantity of) wheat from optional origin.
But prices certainly "gives attraction to" European grain as the final choice, Agritel said.
Corn vs wheat
Paris wheat for March added 1.4% to E251.50 a tonne, while rapeseed for February edged 0.5% higher to E466.50 a tonne, gaining strength from the concerns over fellow oilseed soybeans.
And London wheat for May gained 1.2% to £217.65 a tonne, amid continuing talk of import needs after last year's poor harvest, and with UK milling wheat at a small discount to the German supplies which mills have been looking on as a replacement.
However, traders at a major European commodities house cautioned over the threat to UK wheat in feed use posed by corn.
"New crop Ukrainian corn is already trading into Europe and it could be bought delivered to the UK at about £165 a tonne, far below current UK wheat prices for autumn delivery," the traders said.
"What's more, even old crop maize from the Black Sea looks cheap and we are getting to the stage when some feed manufacturers may take the step of switching to more corn, in the knowledge that they would benefit, not just for the rest of this season, but next season as well."
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