Soybean futures turned a little lower on Friday, with some light end-of-week profit taking, but corn futures rallied on decent export demand, while wheat futures got support from the heavy rains in Europe, which are threatening crop production there.

And coffee and sugar both soared, thanks to rains in Brazil, and a weakening dollar.

Soybeans have been enjoying a rally thanks to fund buying, and the developing fears of dry weather in the US Midwest next month.

“Weather maps have added some heat and dry conditions for the near term forecast, adding fuel to the fund-led rally in grains,” said Paul Georgey at Allendale.

“Ags are already trading like a drought-market and its only June 3,” noted Tregg Cronin. at Halo Commodities.

But even before the day’s sell-off, traders were flagging some dangers to prices.

Mike Zuzolo, at Global Commodities Analytics, warned that markets would need to find new fundamental support in the June 10 Wasde to continue their rally, while Richardl Feltes, at RJ O’Brien, warned that the June 30 USDA crop sowings report, could show rising soybean acres.

Brazilian prospects cut

A major factor driving ideas of squeezed soybean supply has been the recent flooding Argentina.

Informa Economics left its forecast of the Argentine soybean crop unchanged from last month, at 55.0m tonnes.

This is well down from the 60m tonne expectations being circulated before the floods developed in April, but is still above some ideas of a 50m tonnes harvest.

But Informa cut its estimate of Brazil’s soybean crop by 1.6m tonnes to 98.5m tonnes.

Overbought market

Soybean export sales for the 2015-16 marketing year in line with expectations, at 309,400 tonnes.

Commitments for export sales in 2015-16 are already 100.7% of the US Department of Agriculture’s forecast for the marketing year, and there are still three months left to go.

Still, the front-month soybeans, which hit a near two-year early in the session, turned lower on a touch of light profit taking at the end of the week.

“There really hasn’t been much in the way of fresh new added to the equation,” said Kim Rugel, at Benson Quinn Commodities.

And technical signals suggest soybeans are “extremely overbought,” Ms Rugel said.

July soybeans finished at $11.32 a bushel, down 0.9% on the day, having reached two-year highs $11.69 a bushel.

New crop boost

But new-crop soybean prices rose, sustained by some good export sales, and the US weather concerns.

US export sales for the 2016-17 marketing year were better than expected, at 736,700 tonnes, the biggest so far.

New crop November soybeans finished up 0.6%, at a 22-month high of $10.85 ¼ a bushel.

Strong sales

Corn export sales were once again very strong. Sales in 2015-16 were 1.3m tonnes, where markets were expecting between 800,000 and 1.1m tonnes.

True, export sales for 2016-17 were 128,000 tonnes, below expectations of 200,000 to 400,000 tonnes, but the overall volume was still very high.

Informa cut its forecast for Brazil’s total corn harvest by 2.1m tonnes, to 78.9m tonnes.

July corn futures finished up 0.9%, at $4.18 ¼ a bushel.

French rains threaten crops

Wheat futures in Paris jumped to a five month high, as concerns gathered about the effects of recent heavy rain, that has seen a state of emergency declared in some regions.

“This increases the risk for disease,” Gautier Maupu, analyst at the French crop consultancy Agritel, told Agrimoney.

Mr Maupu noted that with some wheat in the flowering stage, there was a “big risk on the yields”.

FranceAgriMer, the French farm bureau, rated the condition of the country’s soft wheat crop at 81%, as of Monday, even before the worst of the flooding.

While still a strong number, it was down 2 points week on week, and well below the reading of 89% a year ago.

Paris wheat futures finished up 1.2%, at E169.75 a bushel.

Improving Australian prospects

In Australia, meanwhile, heavy rainfall is being welcomed.

“Abundant rainfall has been welcomed on Australia’s east coast as much of the area has experienced dry conditions,” said Jennifer Webster, at CHS Hedging.

Australia’s meteorological bureau cut its forecast

Up to 100mm is forecast to fall across Eastern Australia over the next eight days, the Australian Bureau of Meteorology said on Friday.

This would be about half the average amount of June rainfall.

Weak dollar gives support

Informa Economics, lifted its estimate of the US winter wheat crop to about 1.448bn bushels, from a previous estimate of 1.405bn bushels.

US wheat export sales came in in-line with expectations, at 107,400 tonnes in the 2015-16 marketing year, and 385,000 tonnes in the 2016-17 marketing year.

Extra support came across the commodity complex, as the US dollar plunged due to a very disappointing jobs report, the worst since 2010.

The dollar was down 1.6% against a basket of world currencies, lending support to dollar denominated commodities.

July wheat futures rose by 2.2%, to finish at $4.97 ¼ a bushel.

Brazil still driving sugar market higher

Raw sugar futures extended their rally to two-and-a-half year highs.

Strength in sugar was fuelled by rains in Brazil, which is threatening the harvest and exports there, as well as fresh support from a shift in the real/dollar exchange rate.

“The weather issues in center-south Brazil affecting crushing towards the end of May and so far at the beginning of June have spooked some shorts and a measure of panic has set in,” said Nick Penney, at Sucden Financial.

And the real was up 1.8% against the dollar in afternoon deals, fuelled in part by falling greenback.

A stronger real discourages producer selling and production in the world’s top exporter.

July raw sugar futures settled up 3.7%, at 18.75 cents a pound, the highest since October 2013.

Rains also support coffee

Brazil is also the world’s top coffee producer, so the real was supportive there, while fund interest also played a part in a rallying market.

Jack Scoville, at Price Futures group, noted fresh “buying from speculators”.

And rains in South Brazil are also threatening the arabica crop there, the CNC producers’ group said.

“Weather conditions in Brazil favoured the positive slope of the future prices of the commodity in recent days,” CNC said.

“The rains in the main Brazilian producing regions raised concerns about the possibility of loss of quality and yield of the 2016-17 crop.”

July arabica coffee settled up 3.3%, at 127.10 cents a pound.

July robusta coffee settled up 0.6%, at $1,641 a tonne.

Cotton rallies, amid sowing concerns

US weekly cotton export sales were reported at 125,000 running bales for the 2015-16 marketing year, while 2016-17 exports were 74,300 running bales.

There are some concerns about sowing prospects in the US, where planting has already been delayed by rain.

“Forecasters say rain will halt field work in some parts of the Southern Plains until the end of the week,” said Tobin Gorey, at Commonwealth Bank of Australia.

July cotton futures rose by 1.6%, to settle at 63.92 cents a pound.