It might have been a reasonably upbeat day for many crops,
were in not for Wednesday's agenda.
Macro markets were favourable, after Wen Jiabao, the Chinese
premier, promised that Beijing will do more to boost flagging growth in the
world's second-biggest economy.
While acknowledging that China's downturn had gathered pace,
he pointed out that the government had plenty of firepower left at its
"By the end of July we still had about 1,000bn remninbi
($158bn) in surplus on our government balance sheet and we have set aside
around 100bn remninbi as our stability and adjustment fund, which we will not
hesitate to use," Mr Wen said.
That spurred ideas that the US central bank might be about to
unveil some economic stimulus, at its monthly monetary policy meeting this
"The Federal Reserve meeting on September 12 and 13 has
traders expecting an announcement of QE3. The other camp is saying Bernanke
will save his bullets for a better time," Paul Georgy at broker Allendale said.
And, indeed, it provided a boost to many risk assets, with
shares trading higher, standing 0.7% up on Wall Street in late deals, and the
safe haven of the dollar losing 0.7%
at the thought of a Fed move which could debase the currency a touch.
A weaker dollar is helpful to the price of dollar-denominated
exports, such as many commodities, in making them more affordable as exports.
And indeed, the CRB commodities index added 0.5%.
However, many agricultural commodities were not joining in
the rally. (Did SocGen get the market right in making a bearish call?)
In the case of raw
sugar, that was down to data from Unica, the cane industry group, showing further
strong output from Brazil's key Centre South region, following the turn dry in
the weather (which is, on a separate note, raising some concerns over soybean
"The amount of sugar cane processed by mills of the Centre
South of the country continues to expand," reaching 46.5m tonnes in the second
half of August, up from 40.7m tonnes a year before, Unica said.
Output of sugar itself rose more than 12% to 3.34m tonnes.
New York raw sugar for October closed higher, but only by
0.01 cents at 19.44 cents a pound.
For Chicago crops, what news there was came in largely
supportive, on paper, to prices, with China, which was rumoured on Monday to
have cancelled soybean import
cargoes, now said to be buying on market decline.
Confirmed was an Egyptian purchase of 120,000 tonnes of French wheat, the first order by the top
importer from the European Union's top producer at tender since January.
Indeed, the order followed a tender which appeared to show Russian
supplies disappearing from the running, as might be expected given a drought-hit
harvest and a cracking export pace at the start of 2012-13.
And the potential exit of Russia would be good news for
other exporters, such as the EU and US, in driving business their way.
Indeed, US wheat was priced less than $12 a tonne above
Russian wheat this time, excluding freight, compared with a premium of some $40
a tonne last month.
"Egypt is still able to purchase non-US wheat but world
values are grinding higher, it's still not closing time at the local watering
hole," Mike O'Dea at broker FCStone said.
Furthermore, Abares downgraded its forecast for the Australian wheat crop, by 1.6m tonnes to 22.5m tonnes, and a weather threat
emerged in the US too.
"A cold snap is forecast for the US in the 11-to-15 day
maps. The frost threat is in north east Iowa, Minnesota, and the Dakotas," US
Benson Quinn Commodities said: "The weather outlook is
turning cooler after one more short of above-average temperatures.
"Overnight lows could
bring frost/freeze to the northern reaches of Minnesota, the Dakotas and Iowa."
However, bears had some answers. "Crops are mature enough in
the region to handle a frost," Benson Quinn said.
And Abares cut its estimate for the Australian wheat harvest does not look like reducing the country's force as a competitor on the world export
The bureau raised its forecast for Australian wheat shipments
by 1.0m tonnes, to 21.5m tonnes.
Furthermore, they had a weather card to play themselves, in
terms of rains which are improving hopes that newly-started US winter wheat
sowings will get a decent start heading towards winter.
Whatever, prices appeared in no mood to travel too far
upwards when a US Department of Agriculture Wasde crop report is due on
Wednesday, with ideas that any cuts to yield estimates it might introduce have
already been factored in to prices.
"The market has already dialled in a low yield after Informa
put out a 119.8 bushels-per-acre corn yield and a 35.4 bushels-per-acre yield
on soybeans" on Friday, US Commodities said.
And in fact, ideas over the soybean yield are continuing to
improve, following an upgrade overnight in the USDA's ratings of the domestic crop, and from anecdotal evidence too.
"There have only been a trickle of Midwest soybean harvest
yields, so far but the few we've seen are decent which may be impacting soy
trade," Richard Feltes at RJ O'Brien said.
'Lot of long
"Overall these markets are still heavy and there is a lot of
long liquidation ahead of tomorrow's USDA numbers," Darrell Holaday at Country
"The longs are tired and the lack of new news is pushing
many of them out ahead of the report."
Wheat for December
stood down 0.3% at $8.86 ½ a bushel with some 45 minutes of Chicago trading to
go, with December corn down 0.6% at $7.78 ¾ a bushel.
Soybeans fared worst, shedding 0.7% to $17.06 ½ a bushel, heading
for a fifth successive negative close.