Soybean futures remained - just - in positive territory in late deals.

But, with an hour or so of dealing to go, they remained well off highs set earlier, when the spot contract set a record high, and the better-traded November lot a contract top.

Beginning-of-the-month continued to offer some support. Funds are often seen as injecting fresh cash into agricultural commodity markets at the start of months (Tuesday being the first US trading day, after yesterday's Labor Day holiday), while often withdrawing at month ends.

Benson Quinn Commodities, early on, flagged a rush of "outside money on expectations for new stimulus from Europe and China after disappointing economic data".

China, as a huge buyer of raw materials, including cotton and soybeans, is particularly closely watched on commodity markets. And Europe is an important customer for China.

Factory slide

However, the fund purchasing faded as external markets turned negative, taking fright at just the extent of help the US economy may need.

The US manufacturing sector shrank in August for the third consecutive month and at the fastest pace in more than three years, a report from the Institute for Supply Management showed.

Shares stood 0.6% lower on Wall Street, having closed down 1.5% in London and 1.6% in Paris.

Brent crude dropped 1.2% back below $115 a barrel, while the CRB index was down 0.3%. The safe haven of the dollar added 0.2%.

'Too little, too late'

Against that background, soybeans were not faring too badly, and there was more to their story than mere fund favouritism of crops than that, weather setbacks being a fundamental support.

OK, Benson Quinn noted that the "remnants of Hurricane Isaac are helping recharge depleted soil moistures across the central Midwest and may help some of the double-crop soybeans".

Double-crop soybeans are planted typically as a follow-on to winter wheat, and re thus relatively undeveloped and open to improvement from rains, unlike the drought-tested main crop.

"But overall this system is too little, too late to help the majority of the soybean crop," the broker added.

'Blast furnace in the north'

And, in fact, most of the Midwest went dry, and open in parts to the excessive temperatures also brought by Isaac to some areas, topping 100 degrees Fahrenheit on Monday in central and southern Kansas, Oklahoma, western Arkansas   and all of Texas, according to WxRisk.com.

"The weekend heat again stressed corn and soybeans. Soybean areas that missed the rain gave up over the weekend with the blast furnace in the north," US Commodities said.

More will be known on soybean condition later, when the US Department of Agriculture publishes its weekly crop progress report.

As an extra question mark on output, there is further talk over the dry weather in Brazil reported by Agrimoney.com last week, amid talk of a fading El Nino.

"Some attention is starting to be paid to drier-than-desired conditions in northern Brazil, where they would like to start planting soybeans in the next week," Darrell Holaday at Country Futures said.

"This is certainly not critical, but the world supply situation is very tenuous and that makes every grain production situation throughout the world more important."                  

'Did buy a few cargoes'

And demand signs were strong on soybeans, and corn and soymeal, too, with zero deliveries being lodged against the expiring September contracts, indicating no rush by producers to sell against the futures - either because prices in the cash market or better or they are not selling at all.

Furthermore, there was talk of more purchases by China, the top importer, which "did buy a few cargoes of US soybeans over the holiday weekend", US Commodities said.

"China and the world continue to secure supplies on dips," and may have little choice given that Brazilian supplies appear to be running short, to judge by export data showing a slump to 2.43m tonnes in the South American country's shipments last month.

That is down from 4.13m tonnes in July, and 2.59m tonnes in August last year.

Chicago soybeans for September fell back from an early record high, for a spot contract, of $17.94 ¾ a bushel to stand at $17.60 ½ a bushel at 13:00 local time (19:00 UK time), a drop of 0.2% on the day.

The better-traded November contract dropped back from a contract high of $17.89 a bushel to stand at $17.58 ¼ a bushel, a gain of 0.1%.

'Yields remain poor'

Corn lost its hold on positive territory, but at least outperformed the CRB index too, helped by a lack of deliveries against the expiring Chicago contract, but also by the USDA's announcement of a sale of US supplies to Japan – 180,000 tonnes to be exact, for 2013-14 delivery.

The grain has not had so much to shout about as soybeans on the export front and, indeed, US exports as measured by cargo inspections for the week to August 30, the last full week of the crop's 2011-12 marketing year, came in at 6.37m bushels, less than half those of the week before.

Furthermore, on the harvest front "corn yields remain poor", US Commodities said.

"Most yield reports on corn range from 30-110 bushels per acre. Yields thus far have not improved as the combines move north."

Corn for December stood 0.1% lower at $7.99 a bushel.

Wheat eases

But wheat dropped 0.8% to $8.82 ¾ a bushel for December, feeling greater pressure from the Midwest rains, which improve seed beds for winter crops about to be sown.

"This rainfall will help the wheat seeding," Allendale's Paul Georgy said.

Furthermore, the Canadian crop is said to be coming off with good quality as well as quantity, and holding protein levels considered well above average.

Technical factors dragged too.

US Commodities said: "The wheat market topped on July 23 and has not been able to move back to the old highs," hardly an attraction for fund buying.

In Europe, Paris wheat for November ended down 0.7% at E262.75 a tonne, while its London peer held steady at £204.50 a tonne.

 Cocoa cools

Soft commodities suffered more substantially from the broader market weakness, with even cocoa, a firm performer of late, losing ground, ending down 2.3% at $2,551 a tonne in New York, for December delivery.

This despite ideas from Macquarie of a potential virtuous (for bulls) circle of rising prices, thanks the mechanics of Ivory Coast's sales programme.

However, besides macro pressures, slightly improved weather in West Africa encouraged selling, and could potentially be a sign of the weakness of the El Nino, as highlighted by New Zealand meteorologists earlier.

The stronger the El Nino, generally the worse the impact on world cocoa production, with La Ninas favouring higher output.

Sugar turns sour

New York coffee for December managed to close higher, up 0.4% at 165.30 cents a pound, but well below earlier highs, after the International Coffee Organization raised its forecast for world coffee production in 2011-12, and flagged a recovery in Colombia's output.

London robusta beans for November dropped 0.7% to $2,081 a tonne.

But sugar ended down 2.2% at 19.34 cents a pound for October delivery, the worst close for a spot contract since early June, plagued by forecasts for decent world supplies, as highlighted by the International Sugar Organization on Friday.

At Phillip Futures, Ker Chung Yang noted a "macro undertone of a sizeable surplus from Brazil's harvesting".