In the early period of this year's grain and oilseeds rally,
a week could not begin without a rise in prices.
Investors who took profits on Fridays for fears of rain entering
the US weather forecast over the weekend would pile back into the market.
Now, it is getting to be quite the opposite, with "the
direction" of futures "solidly in the red like last week", Darrell Holaday at
Country Futures noted.
'Selling pressure is
As for the reasons behind the pressure, well, there was mention of economic worries over China and Europe, and a drop in Brent crude prices below $110 a barrel, besides crop-specific factors commonplace of late.
At RJ O'Brien, Richard Feltes said: "Selling pressure is intensifying
as more players engage with the same themes that dominated trade last
week—tepid corn export demand, fund
liquidation, better-than-expected soybean
yields and poor chart action."
But to dismiss Monday as some kind of Groundhog Day would be
to undersell it.
There were some fresh developments beginning to come into the
mix (and beyond the latest, still unconfirmed, rumours of Chinese buyers
snapping up soybeans on the break in prices).
End of the month,
For one, there was more talk of the US crop stocks data
coming at the end of the week, which is expected to be downright confusing as
an early harvest adds to inventories left over from 2011, with that not the only
reason Friday is being seen as important.
"The last topic that
you will hear this week will be that we are approaching the end of the month
and the end of the quarter," Steve Georgy at Allendale said.
"This usually has fund money moving around and has the
ability to push the grain markets around as well."
Typically, the ends of months are seen as encouraging funds
to close positions, before pumping in money at month/quarter beginning.
Seasonal lows this
But are funds really wanting to sell down much more, after the
liquidation that has already happened, and highlighted in latest regulatory data?
"Net long fund positions in corn and soybeans have gotten
considerably more manageable over the course of the last week," Benson Quinn
That was something of a change of general market thinking of
As was talk that harvest pressure may be nearing its end
too, with bulls also offered cheer by Barclays Capital crop price forecasts.
"Many in the trade will expect the agriculture markets to
put in seasonal lows early this week," Benson Quinn said.
'Basis levels beginning
Indeed, while USDA crop progress data later on Monday are
expected to show the corn harvest 41-45% complete, and soybean harvest some 20-24%
finished, next week's could be of more significance.
"By October 1, 62-64% of the corn should be harvested nationally,"
US Commodities said.
That matters as around that mark through harvest, many investors
believe that harvest pressure on prices eases.
Already, "basis levels are beginning to firm", US
The upshot was a market which, while following its knee-jerk
tendency of late to trader lower, did not capitulate.
Chicago soybeans for November ended down 0.7% at $16.10 a
bushel, nearly $0.20 a bushel above their intraday low, and despite a tumble in Kuala Lumpur palm oil prices which at one point approached 7%.
Corn for December dropped 0.7% to $7.44 ¾ a bushel, again
well above the day low.
Indeed, if there was a disappointment, it was in wheat,
which having largely led the market of late, with its US harvest and related
price pressure now past, failed to outperform this time.
Weather was largely to blame, as forecasts indicated rains
for areas which need them, whether for crop filling, in Australia, or sowing,
in the US.
"The GFS model continuing to point to good rainfall
potential in Kansas, Missouri, Illinois, Northern and Oklahoma and Texas by the
end of the week," Darrel Holaday said.
The model indicates central and southern Oklahoma may get
Mike O'Dea at FCStone said: "Rain continues to be in the
forecast for the US hard red winter wheat areas, and rain chances are improving
"Western [Australia] wheat areas are to see light showers
but south east parts of the country can see 1-2 inch rains in the middle of the
"While not a crop maker, it would allow crop conditions to
With no further indication of Russian grain export curbs on
the way, or indeed much expectation that restrictions would mean much given
that the country's prices are already rising above competitive levels, wheat
fell 0.7% to $8.92 a bushel in Chicago for December.
In Paris, wheat dropped 1.3% to E260.50 a tonne, and in London
by 0.9% to £204.65 a tonne, for November contracts in both cases.
continued to demonstrate a fresh, upward approach too, adding 0.6% to 19.50
cents a pound for New York's October contract.
The sweetener was given support by rains which raised doubts
about the resurgence in the Brazil Centre South cane crush.
"Unica feel that the crush will continue till mid December,
but if rains get heavier, mills may prefer to shut down earlier and allow the
rains to benefit cane to be crushed in," Nick Penney at Sucden Financial said.
But New York cocoa
for December dropped 3% to $2,446 a tonne, its lowest close for a month.