Perhaps inspired by Luis Suarez, the Uruguayan footballer accused
of biting an Italian rival at the World Cup, agricultural commodity bears chewed
deeper into futures prices, prompting widespread losses.
The worst fall was actually seen in old crop July cotton, which plunged an astonishing 6.5%
to 81.81 cents a pound, the weakest close for a spot contract in six months, although
this was seen as largely down to technical factors.
With expiry approaching, and buyers scarce, investors still
holding long positions are having to exit at whatever price they can get.
Citigroup's Sterling Smith noted that "open interest has
imploded over the last two days in the July contract", a sign of investors
closing up and getting out.
The decline made the 1.5% drop to 76.49 cents a pound in the
new crop December contract look positive benign.
US Department of Agriculture data overnight highlighted improvement in the condition of the US crop, helped by rains in Texas, the top
cotton-producing state, moisture which has boded less well for winter wheat in potentially posing a quality
futures suffered too, with the USDA crop progress data showing decent harvest
progress last week in many states, including Oklahoma, where growers harvested
more than one-quarter of their crop last week, besides in Texas itself.
In Kansas, the top wheat growing state, farmers remain 10
points behind, having 24% of their crop in the barn as of Sunday.
But there was enough there to spark ideas of plenty of
supplies around for buyers to choose from, and potentially a growing willingness
among producers to sell, now that much of their crop is known and counted.
Besides the forecast for the south western Plains "has
tended drier", boding well for harvest progress.
Harvest is also ramping up in other northern hemisphere
countries, adding to harvest pressure on prices.
And there is not that much idea around of what will stop
them going down, in the US especially, where prices appear expensive compared
with those in many other geographies.
"The export wire continues to be active, however little of
the demand is pointed at the US," Mr Smith said.
Benson Quinn Commodities also questioned how positive for
prices is the talk of vomitoxin, a harmful fungal residue, in soft red winter
"The quality of the soft red winter wheat crop is in
question and not bullish," the broker said, with that depending on the quality
standards for delivery against Chicago futures, or whether some broader reputational
issue is involved.
'Slide back into
Technically, "it feels like the wheat markets are going to
slide back into oversold conditions before finding support", the broker added.
In fact, Chicago's best traded September soft red winter
wheat futures contract closed down 1.4% at $5.80 ¾ a bushel, its lowest finish
in getting on for five months.
For Kansas City hard red winter wheat futures, the September
lot ended down 1.3% at $7.03 ¼ a bushel, having curried technical disfavour by falling
in the last session below its 200-day moving average.
Paris soft milling wheat futures dropped 1.1% to E186.50 a
tonne – a nine-month low for a spot contract, weighed by the looming prospect
of a huge European Union harvest, estimated by Coceral at the second highest on
Corn actually did
better, in ending down a relatively small 0.3% at $4.43 a bushel for July delivery,
and by 0.6% at $4.40 ¾ a bushel for the new crop December lot.
Although the USDA did, in a report overnight, show damage to
US corn in some states last week, the overall crop remains in good health.
"Weekly crop conditions were down a couple of points, but
were in line with trade expectations," CHS Hedging said.
And the weather outlook looks benign.
"A drier weather profile is expected for areas that dealt
with heavy rains and some flooding, while the rest of the Corn Belt is expected
to see periodic showers, normal temperatures and ample sunshine," Benson Quinn Commodities
0.8% to $14.13 ½ a bushel for July delivery, and the same to $12.24 ½ a bushel
for the new crop November futures contract, despite the concern over tight
stocks underlined by Rabobank on Monday.
But, besides improved weather hopes, the oilseed faced a
host of technical challenges too.
Darrell Holaday at Country Futures noted "significant
technical discussion of the November soybean chart", which could be on the way
to showing a head and shoulders pattern, a negative price signal.
"A close below $12.02 a bushel would be very negative and
would signal a move down to $11.20 a bushel," he said, although the contract at
least avoided that fate.
What it could not sidestep, however, was a drop below a
clutch of moving averages.
"Overnight trade saw the Nov contract fail at the 50- and
20-day moving averages, and a negative chart pattern is forming in this
contract," Benson Quinn Commodities said.
The July contract in this session dropped back below its
10-day and 100-day moving averages.
Back in New York, arabica
coffee for September dropped 0.6% to 176.25 cents a pound for September delivery,
awaiting more news on the extent of the damage to Brazil's crop from the early-year
Raw sugar for
October edged 0.1% lower to 18.69 cents a pound, with doubts here too about
just how much damage has been done to Brazilian cane from dry weather, and with
rain now not necessarily likely to prove a help, as Marex Spectron highlighted.