As Thursday's benchmark US crop report drew nearer, its
shadow over crops markets only grew larger.
There were a few factors to draw investors off their course of
selling down soybean and corn futures.
The US, for instance, announced the sale of 120,000 tonnes
of soybeans to China, supporting ideas of continued strong demand from the top
importer of the oilseed.
"There will undoubtedly be rumours of more Chinese soybean
business, which is very likely the case," Benson Quinn Commodities said.
Slow farm selling
Furthermore, US corn and soybean cash markets remained firm,
amid ideas that farmers are proving unwilling to sell at these lower price levels,
beyond crop they had already contracted to sell.
"The farmer just seems to be interested in finishing the
harvest and closing the barn door," Jerry Gidel, chief feed grains analyst at
broker Rice Dairy, said.
"Farmers turned down $17 a bushel on soybeans earlier in the
season. They are not interested in selling at these levels."
'Focus on liquidation'
However, funds did prove willing to sell, getting shot of
6,000 corn lots and 9,000 soybean contracts on the day, quitting ahead of the
US Department of Agriculture's key monthly Wasde report on Thursday.
After all, the report is expected to raise estimates for both US corn and, especially, soybean production.
And as an extra uncertainty, analyst forecasts are particularly
far spread encouraged selling of large net long positions.
"Given the wide estimate ranges going into this report,
there is reason to believe that the trade may have a focus on liquidating both
long and short positions," Benson Quinn said.
"The corn and soybean markets continue to trade like markets
that have too much speculative length still at work."
Already factored in?
It was of small significance that investors have already
factored in a large dose of upward revision to US harvest hopes.
"The October crop report is unlikely to illicit negative
response unless corn and soybean yields are north of 126 bushels per acre and 40
bushels per acre respectively," Richard Feltes at RJ O'Brien said.
Any investors in two minds over selling will have been little
reassured by negative technical signals, with soybeans for November, in
dropping 1.6% to $15.23 ¼ a bushel for November, closing below their 100-day
moving average for the first time in four months.
It was also the lowest finish for a spot contract in three
Winter wheat concerns
For corn "it is worth noting that the December corn contract
did fail to hold the low side of the recent range, which could trigger some
additional fund selling", Benson Quinn said.
In fact, the December lot ended down 0.7% at $7.36 ¾ a
bushel in Chicago.
Not even of support was stronger wheat, which was helped by concerns over the US winter
crop currently being planted, after official data showed lagging emergence levels, thanks to US dryness which
shows little sign of easing up for now.
"Some of strength in wheat is tied to a GFS weather model
that is certainly not as generous with rainfall in the US hard red winter wheat
areas this weekend," Darrell Holaday at Country Futures said.
"Northern Oklahoma and parts of southern Kansas are the most
likely to receive the generous amounts according to the latest run."
Wheat for December added 0.7% to $8.69 ¾ a bushel in Chicago.
That outperformed European contracts, with Paris wheat for
November flat at E261.25 a tonne, despite FranceAgriMer lifting its forecast for French exports of the grain.
'Trade are still
It little helped in Chicago that risk assets, including
commodities, had a broadly negative day, sapped by the revived fears for the
Wall Street shares
stood 1.0% lower in late deals, while the CRB commodities index lost 0.7%.
The weak sentiment ensnared soft commodities, with raw sugar falling 1.0% to 21.26 cents a
pound for March delivery.
"It seems, by and large, that the trade are still bearish,
eyeing the trade flow surplus" in the sweetener, Sucden Financial said.
"We wonder if current flat price will attract end users,
given we are now almost 2 cents a pound away from the lows," the broker added
noting that "it is end user buying that will determine values" rather than switches
in commercial and speculator positioning.
New York arabica coffee for December dropped 1.1% to a
one-month low of 163.45 cents a pound, sapped by revived ideas for Brazil's
An official at Brazil's Department of the Rural Economy, Deral,
flagged the intense and uniform nature of coffee tree flowering, helped by
favourable weather, while separate reports spoke of strong flowering in the key
producing state of Minas Gerais.