Commodities got a little bit of their own back on Tuesday.
Equities, which have stolen the markets limelight of late, and a stack of cash from commodity investments too, struggled against pressure from profit-taking.
But commodities found room for small gains overall, up 0.3% for the CRB index, and with individual headway which was higher for the likes of London robusta coffee, which for May delivery added 0.8% to $2,206 a tonne, the highest close for a nearest-but-one contract since October.
The bean is being boosted by ideas that the harvest in Vietnam, the biggest robusta grower, may decline for second year because of drought in main growing regions.
Luong Van Tu, chairman of the Vietnam Coffee & Cocoa Association, or Vicofa, said that the 2013-14 harvest would fall by 30%, following a 25% drop to 1.5m tonnes in 2012-13, he said, although there is some idea that Vicofa might be overplaying its hand.
'Risk of short-covering rally'
Robusta's performance helped robusta close further its discount to arabica coffee, which closed down 1.0% at 142.35 cents a pound in New York for May delivery, remaining under pressure from the prospect of a large Brazilian crop this year.
Goldman Sachs said: "The arabica market may only be in a modest deficit or even remain balanced in 2013-14," an unusual outcome for what is an off-year in Brazil, which has alternate higher and lower producing years.
Nonetheless, "given still-low inventories, we see limited further downside to prices and expect coffee prices to recover modestly in 2013 with our price forecast above the current forward curve," the bank said.
"In fact, growing focus on the spread of coffee leaf rust in Central America, with downside risks to local production estimates, in the face of record short net speculative positioning create risk for a short-covering rally in coming months."
'Talk of the day'
Back among the gainers, corn managed a fourth successive session of headway in Chicago, still feeling support from Friday's US Department of Agriculture Wasde crop report, which hiked the forecast for consumption of the grain by domestic livestock producers.
"Corn remains the talk of the day with the decrease in US corn exports being more than offset by the associated increase in feed use,"Jaime Nolan Miralles at broker FCStone said.
The grain is gaining support from its use in making ethanol, and the surge in values of Rins, the paper credits which blenders can use an alternative to physical biofuel in meeting US mandates, which in turn has boosted the economics of making the fuel.
Producers or importers of renewable fuels generate a Rin (renewable identification number) for each gallon of the biofuel they supply.
Rins prices topped $1 a gallon on Monday, boosted by demand from blenders facing lower rates of ethanol production, and imports, than last year, although the price fell back to some $0.90 a gall on Tuesday, having fallen below $0.70 a gallon earlier.
"The price of ethanol has jumped up to the $2.70-plus-a-gallon area as blenders are bidding up to buy ethanol to meet their blending requirements," Darrell Holaday at Country Futures said.
"Imports of ethanol have dropped to zero and the price of a Rin has went through the roof. Therefore, a real gallon of ethanol has gained value."
Bumper basis levels
Furthermore, corn gained from the short squeeze in the March contract as investors try to close positions before expiry later this week, and at a time when physical corn is expensive to come by.
"The short squeeze in the March corn continues to be the primary story in the corn along with the scramble for cash corn throughout the Corn Belt," Mr Holaday said.
"New reports of prices $0.60-90-a-bushel over May are surfacing in Illinois and Indiana at ethanol plants."
Corn for March closed up 0.9% at $7.41 a bushel, a three-month high for a spot contract, while the better-traded May lot gained 0.5% to $7.14 ½ a bushel.
'Speculator should be careful'
Wheat, for once, kept up with that.
Being at levels when it is already unusually weak compared with corn, it received a helping hand from the rise its fellow grain.
Furthermore, its failure for four sessions now to set a fresh eight-month low appears to be encouraging some profit-taking among the speculators who have a hefty number of short positions in the grain in Chicago, and a net short now in Kansas too.
Benson Quinn Commodities, noting "a more supportive tone" to wheat markets, said that "the speculator should be careful adding new short positions near these levels.
"A large percentage of the fund short in Chicago is in the May contract, which should cause some fireworks as the fund liquidates the May short position via spreads or outright buying."
'Missed out on significant rainfall'
Furthermore, "news of continued domestic feed demand and a competitive edge in a rather mundane global export scene are signs that the wheat market has value near these levels", the broker said.
And, as an extra support, some investors questioned the sustainability of the improvement in the US winter wheat crop, as revealed in data overnight showing better ratings in Kansas and Oklahoma – but not Texas.
"If one looks at the rainfall in the last seven days you will find that a large part of the US hard red winter wheat area missed out on significant rainfall," Country Futures' Darrell Holaday said.
Wheat for May ended 0.5% higher at $7.03 ½ a bushel.
'Port congestion worsening'
The laggard among Chicago's big three was, again, soybeans, which closed down 0.7% at $14.68 ¾ a bushel for May delivery, sapped by profit-taking.
Sure, there is continued concern over hold-ups to Brazilian supplies.
US Commodities said: "Brazil port loadings have slowed due to the huge export pace. The loading line-up is now about 50-60 days. This indicates a long overhead of movement ahead.
At RJ O'Brien, Richard Feltes said: "Port congestion is worsening, with over 10m tonnes of soybeans waiting to load, and with Paranagua and Santos waiting times reported at 50-55 days and 35-40 days respectively."
However, there were no confirmations of further trade going the way of the US.
Indeed, investors faced a caution from the US Department of Agriculture of an imminent collapse in domestic crushing margins, besides a warning from Oil World that the time of high prices may be running out.