For many markets, the countdown to the deadline to agreement
an extension to the US debt ceiling, and the risk of default, remained the biggest
influence on investors.
But for agricultural commodities, some other geographies had
a big impact too.
Slowed the harvest
Take raw sugar,
which recovered from early weakness to end up 0.6% at 19.05 cents a pound in
New York for March delivery, the highest close for a spot contract, a
nine-month high for a spot contract, helped by forecasts of further wet weather
in Brazil's key Centre South region.
On Thursday alone, the states of Sao Paulo and Minas Gerais will
receive up to 1 inch of rain, meteorologists at Somar said.
This when data from cane industry group Unica last week revealed
that rains had already slowed the cane harvest more than 20% in the second half
of September, compared with the first half, with sugar output dropping even
more, as sucrose levels in cane were diluted.
'Lots of issues for
"There's lots of issues for the bulls to get their teeth
into," Thomas Kujawa, co-head of the softs department at Sucden Financial, said,
citing also "technical chart bottoming".
Moving averages are moving upwards through each other nicely
Sure, hedge funds have already stashed in a considerable amount
of long positions in recent weeks (ie betting large on rising prices), in a
dramatic swing from record high net shorts over the summer but raising
questions over whether the last of the buyers has struck.
But "the current estimate is a net fund long somewhere
between 125,000-150,000 lots, so well within the boundaries of possible further
buying", Mr Kujawa said.
Nor did Indian farmers' relief at apparently relatively
little cane damage from a weekend storm do lasting damage to prices.
Another country in play was China, especially in the soybean market.
China's National Grain and Oils Information Center bureau,
not renowned for cautious estimates, cut warned that the Chinese soybean crop may
decline 4.2% to 12.5m tonnes.
"The soybean number was considered friendly and that has
been the major fundamental behind the higher market today," Darrell Holaday at
Country Futures said.
But this was especially so against ideas that China has been
undertaking a stack of soybean purchases while the US Department of Agriculture
remains in shutdown, so not operating its system for alerting investors of
The comparison, which Agrimoney.com has been making since
the shutdown started, with the Great Grain Robbery of 1972, when the Soviet Union
stockpiled 24m tonnes of US grains underneath the radar, has been spreading.
Mr Holaday said: "The lower production number fuelled ideas
that China has accumulated 1m-1.5m tonnes of US soybeans in the last 10 days."
At RJ O'Brien, Richard Feltes flagged "chatter that China booked
10-15 US soy cargoes last week", (which if every cargo is about 50,000 tonnes,
actually works out to a lower figure).
The country was shown to have imported 4.7m tonnes of
soybeans last month, a figure well down on the August total, but enough nonetheless
to believe that the USDA's estimate for Chinese imports of 59.5m tonnes in
2012-13 is 400,000 tonnes too low.
Back to 2013-14 shipments, and the market was denied even
the weekly export data from Gipsa, measuring shipments by cargo inspections,
this week, with the Colombus Day holiday shutting, temporarily, one of the last
lifelines let open to official data.
Other data missing include, of course, the crop progress
data, which would be expected to show the US soybean harvest at 45-50%
Mr Feltes said: "Processors know that the bulk of soy
harvest in many areas will be over by end of week," a factor which could start
to ease harvest pressure.
Soybeans for November ended up 0.5% at $12.73 a bushel in Chicago.
Corn did even
better, helped by ideas of rain interruption to the US harvest, which is seen about
31% complete despite starting earlier, with farmers focusing on soybeans which
remain at a historically high price.
Indeed, the relatively low value of corn has been curtailing
farmers' sales too, so provoking some kind of squeeze on supplies from a US crop
which is expected to be a record one.
Although the CNGOIC estimated the Chinese corn harvest, the
world's second biggest, at 215m tonnes (4m tonnes above the USDA figure), the
country's reputation for less than exact production forecasts limited the
'Firmly committed to
Furthermore, corn also got a boost from some ideas that the
Environmental Protection Agency may not prove as harsh as thought last week in
limiting the US ethanol mandate.
"The Obama administration remains firmly committed to
furthering the development of all biofuels," the agency said on Monday.
And US exports are after their recent depreciation more
competitive, or at least less uncompetitive, on the world market.
"Gulf corn is now $0.05-0.20 cents a bushel above Brazilian
and Ukrainian corn. The spreads have narrowed from $0.40-0.60 cents a bushel a
couple months ago," US Commodities said.
Corn for December closed up 0.8% at $4.37 a bushel.
That helped wheat
for December nudge 0.25 cents higher to $6.92 ½ a bushel – one of the weights
on the grain has been its premium of $2.50 a bushel or so to corn, implying
that feed buyers will switch grains.
Another negative factor has been technical.
"Wheat markets appear toppy on technically overbought
condition and are lower this morning, with market looking for fresh input after
making new highs for the move on Friday," Benson Quinn Commodities said.
As an extra depressant, ideas on the Australian harvest
improved a little, with GrainCorp countering an idea from Australia Crop
Forecasters of a poor-quality Queensland wheat crop, while CBH Group proved
even more upbeat on prospects for the Western Australia harvest.
'Continue to be
However, elsewhere in the southern hemisphere, concerns
remain over the Argentine crop, while the paucity of the crop In Brazil is
sending cash market prices soaring there too.
"The price of wheat in Parana reached R$50 per sack of 60kg
during September, or approximately $10.30 per bushel," Michael Cordonnier at
Soybean and Corn Advisor said.
"Millers in Brazil continue to be frustrated by the
country's inability to produce larger amounts of high quality wheat."
And then there is the issue of continued rains in Russia too, adding insult to injury by slowing autumn sowings after hurting wheat harvest quality, as highlighted by Black Earth Farming.
In Paris, wheat for November ended down 0.3% at E198.75 a
tonne, and in London by 0.3% at £162.50 a tonne, despite a disappointing UK harvest estimate.
Back among soft commodities, cotton rose 0.3% to 83.61 cents a pound in New York for December
delivery, helped by fears of crop losses to Indian rains, but also by Chinese
stockpiling of 245,230 tonnes of the fibre.
While down 68% year on year, the figure is well above the
100,000 tonnes at the end of September, as reported by the International Cotton
December sank 1.2% to $2,713 a tonne in New York, undermined by weak Malaysian grind data.