by Agrimoney.com
Grain prices extended gains, with wheat rising 2% to regain $7 a bushel in Chicago, after China was said to be back in wheat-buying mode, with Informa Economics and Lanworth chipping in with crop downgrades too.
Chicago wheat for July soared nearly 3% at one point, helping the new crop December corn lot extend its rally too to 5% over the last three session.
The gains followed talk that China had purchased 200,000 tonnes of wheat from France, rumoured to be for delivery between August and October.
Grain prices as of 12:00 Chicago time (18:00 UK time)
Chicago wheat (July): $7.05 ½ a bushel, (+2.6%)
Kansas wheat (July): $7.38 a bushel, (+2.6%)
Chicago corn (December): $5.59 ½ a bushel, (+1.6%)
Paris wheat (November): E199.75 a tonne, (+1.5%)
London wheat (November): £170.05 a tonne, (+1.2%)
Chicago soybeans (November): $13.03 ¼ a bushel, (+1.1%)
"That seems to be what is behind the rise," said Dustin Johnson at Illinois-based broker EHedger.
While the purchase by China of French wheat, an unusual trade, was viewed by many traders as underlining the non-competitiveness of US wheat, typically a preferred destination for Chinese buyers, the deal was seen potentially setting the scene for further deals.
In May, China was said to be looking for 2m-3m tonnes of wheat for state inventories.
Chinese buyers have separately been rumoured to be interested in US purchases, talk enhanced by Chicago wheat's fall below $7 a bushel to levels which have previously whetted their interest.
'Historically-high May temperatures'
As a further support for wheat prices, Lanworth cut by nearly 1.3m tonnes, to 693.0m tonnes, its forecast for world wheat production in 2013-14, with a downgrade to the nascent Ukrainian harvest offsetting upgrades to some other origins, including Australia.
Lanworth 2013-14 wheat forecasts and (change on previous)
World harvest: 692.95m tonnes, (-1.27m tonnes)
Australian harvest: 24.90m tonnes, (+100,000 tonnes)
Russian harvest: 51.70m tonnes, (+900,000 tonnes)
Ukraine harvest: 19.10m tonnes, (-1.40m tonnes)
World carryout inventories: 178.99m tonnes, -810,000 tonnes)
"Historically-high May temperatures will hold production well below the recent high of the 2008-09 season of 25.9m tonnes," Lanworth said, pegging the crop at 19.1m tonnes.
"Outlooks indicate continued warm and dry conditions through late June."
The estimate for the Australian wheat crop was nudged higher to 24.9m tonnes, after "recent and expected increases in June precipitation in key production areas of the eastern and southern wheat regions reduced the likelihood of lowered plantings and yield".
US corn downgrade
Lanworth also cut its estimate for the world corn harvest by 4.2m tonnes to 956.7m tonnes, reflecting a cut of 4.3m tonnes to 346.0m tonnes (13.6bn bushels) in the forecast for the US crop, the world's biggest.
Lanworth 2013-14 corn forecasts and (change on previous)
US yield: 156.7 bushels per acre, (-2.1 bpa)
US area: 95.334 acres, (unchanged)
US harvest: 13.642bn bushels, (-148m bushels)
US carryout inventories: 39.78m tonnes, (-2.27m tonnes)
World harvest: 956.74m tonnes, (-4.23m tonnes)
World carryout inventories: 139.54m tonnes, (-1.97m tonnes)
The downgrade reflected an estimate of 95.3m acres in the forecast for US sowings, a figure some 2m acres below the US Department of Agriculture estimate, which stands to be upgraded by a much-anticipated plantings report on June 28.
Lanworth pegged the yield at 156.7 bushels acre as "widespread above average precipitation continues to lower the probability of extreme drought in western production areas".
The consultancy, which uses satellite imagery to a large part in its forecasts, acknowledged that the wet weather "raises the probability of yield loss in eastern production areas should high precipitation continue during June- August".
Informa downgrades too
The revisions came shortly before analysis group Informa Economics cut its forecast for US corn acres, by 1.6m acres, also to 95.3m acres.
Informa US crop estimates and (change on previous)
Corn sowings: 95.262m acres, (-1.565m acres)
Soybean sowings: 77.756m acres, (-530,000 acres)
Spring wheat sowings, ex-durum: 11.791m acres, (-610,000 acres)
"They look to have it spot on, although some people may be disappointed," EHedger's Dustin Johnson told Agrimoney.com, noting some markets forecasts of the loss of 4m acres to damp.
However, another US analyst told Agrimoney.com: "Informa is known for being conservative. I think the market will take this in its stride.
"It could even be a bit positive for prices, given how Informa is perceived as being a little reluctant to make downgrades."
Informa also cut its estimate for spring wheat plantings, excluding durum, by 610,000 acres to 11.8m acres.
The forecast for soybean acres was cut by 530,000 acres to 77.8m acres.
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