China factor keeps corn and soybeans ahead(2)
Import arb 'now open'
For soybeans, Dalian values are north of $19 a bushel, again opening up the potential for Chinese purchases.
Indeed, Morgan Stanley, in a weekly report, said that the China import arbitrage was "now open", with purchases of US soybeans $0.29 a bushel cheaper than local supplies, even after factoring in transport costs, import tariffs and VAT.
Ideas of strong Chinese imports got a boost from Oil World too, which forecast that these buy-ins will help US soybean shipments record year-on-year growth in the March-to-August period, the second half of 2011-12, after lagging in the first half.
Furthermore, worries about South American output made a reappearance after Michael Cordonnier, at Soybean and Corn Advisor, cut by 1m tonnes to 67m tonnes his estimate for the Brazilian soybean crop, below the USDA's 67m-tonne number.
Chicago soybeans for May ended up 1.1% at $13.48 � a bushel.
'Wet conditions to prevail'
With fellow crops higher it was difficult for Chicago (soft red winter) wheat to stray too far, given that it is at an unusual discount to corn.
The May contract dropped 0.4% to $6.49 a bushel.
That was a lower fall than suffered by Kansas (hard red) wheat for May, which dropped 1.2% to $6.87 � a bushel, and Minneapolis spring wheat for May, which fell 1.0% to $8.11 a bushel.
These wheats, as higher quality crop, are less connected with corn, a feed grain, and felt pressure from better prospects for US winter wheat.
"The forecast for wet conditions to prevail in the US Plains for the next couple of weeks is weighing on wheat values," Mr Holaday said.
Dry Europe
He added: "Weather models are still too dry for Europe and that is supportive" for prices.
USDA officials have reported some damage done already to Spanish winter grains, with a lack of moisture ringing alarm bells in France, the UK and Morocco too.
That helped European wheat prices do better, with Paris wheat for May ending square at E211.50 a tonne, while London May wheat added 0.1% to �.00 a tonne.
But they felt pressure from farmer selling too.
"Good first hand origination and very little consumer buying led to a sell-off into the close," UK traders at a major European commodities house said.
They added: "European Union wheat remains highly uncompetitive on old crop in the world market, with US wheat being more price-competitive into Algeria and Morocco, two of France's traditional main customers."
Still, there were fewer worries over Paris rapeseed which for May, helped by fellow oilseed soybeans, added 0.9% to a nine-month closing high, for a spot contract, of E473.00 a tonne. It was nigh on a contract high for the May lot itself.
Coffee revives
The better macro-economic feel spilled over into many soft commodity markets too, with even New York coffee managing to rediscover forward gears, adding 0.7% to 186.15 cents a pound for May delivery.
While the lot has been pressed by producer rushing to sell at what remain historically elevated prices, if down some 40% from a high in April last year, a high level of short positions among speculators is seen making them twitchy, on the threat of a short-covering rally.
New York raw sugar for May added 1.5% to 24.13 cents a pound, continuing to gain support from Copersucar's downgrade to 32m tonnes, from 34m tonnes, in its forecast for sugar output in Brazil's important Centre South region this year.
"It seems the weak shorts from yesterday are now flushed out," Thomas Kujawa at Sucden Financial added.
