Risk assets may have started Monday in a bright mood, but they certainly didn't end that way.

It wasn't only agricultural commodities which found headway difficult.

Shares stood 0.7% lower in Wall Street in late deals, having tumbled 1.6% in London, 2.5% in Frankfurt and 3.0% in Paris, on declines blamed in part on returning concerns over the eurozone, with borrowing costs rising again in Italy and Spain.

Indeed, the safe haven of the dollar put in a strong performance, adding 0.5%, and only making matters worse for dollar-denominated exports such as many commodities, in making them less affordable to buyers in other currencies.

The CRB commodities index shed 0.7%.

Robusta retreat

But soft commodities certainly did their bit to undermine the index - even London robusta coffee, which for May delivery had earlier hit a three-month high (for a nearest-but-one contract) of $2,074 a tonne.

"The main reason for the latest price increase is the assumption that suppliers in Vietnam, the largest [robusta] growing country, are withholding significant quantities of coffee in a bid to achieve higher prices," Commerzbank said, acknowledging expectations of a disappointing harvest there are supporting values too.

"The harvest which was completed in December is likely to be well below last year's record crop of 1.65m tonnes.

"The only thing that is in dispute is how sharp the decline will turn out to be," with the Vietnam Coffee and Cocoa Association pegging the decline at 25%, ahead of a market consensus of a 15% drop.

The May robusta contract closed down 0.4% at $2,047 a tonne, little helped by a 2.4% slump to 144.35 cents a pound in New York arabica coffee, for March delivery.

'Consensus remains bearish'

Cotton fell back in New York too, by 1.5% to 81.74 cents a pound for March delivery, undermined by an upgrade by the International Cotton Advisory Committee to its forecast for stocks at the close of 2012-13 and next season.

Furthermore, regulatory data, from the Commodity Futures Trading Commission, showed speculators had built up a large net long position, of more than 53,000 contracts, the largest since October 2010, and the kind of level to give investors a bit of vertigo.

And raw sugar for March fell 0.8% to 18.73 cents a pound as the CFTC data showed speculators had already closed a stack of their huge number of short positions, lowering prospects for price support from this area.

Furthermore, Sucden Financial's Thomas Kujawa said that the gossip at the Dubai sugar conference "is that the consensus remains bearish".

'Very little rain'

So set against that backdrop, the losses in grain prices did not seem so bad, and the 1.0% rise to $14.88 ¾ a bushel in Chicago soybean futures, for March delivery, positively sparkling.

The gains reflected in part the further deterioration in hopes for Argentina's crop, with weather continuing to prove too dry.

"Less rain than expected arrived in Argentina over the weekend which has pushed the soybean price along," said Darrell Holaday at Country Futures.

"The week ahead also forecasts very little rain for the major soy area."

US Commodities said: "The market is higher this am on a more threatening weather forecast for Argentina.

"The weekend rains were disappointing with the forecast for another eight days of warm, dry conditions," at a time when soybean crops are in their sensitive pod-setting phase, and corn in its vulnerable pollination period.

Brazil decline

However, ideas for the Brazilian harvest also waned too, as the rains in central states such as Mato Grosso which had been viewed as underpinning yields, if slowing harvest and the transfer of crop to port, were now seen as a threat to production too.

AgRural ended the series of upgrades to Brazilian soybean estimates by cutting its forecast by 1.0m tonnes, while Dr Michael Cordonnier, the respected crop scout, in comments to Agrimoney.com warned of quality issues too.

"We are talking about small, shrivelled seed, some is mouldy, with light weight, on which farmers are being forced to take discounts" to sell, Dr Cordonnier said.

"They were talking about a super-record harvest in Mato Grosso. Now they just hope the weather dries up so they can get an average yield."

Export fillip

As further support, the US Department of Agriculture revealed upbeat news on the US export front.

The US actually exported 53.9m bushels of wheat last week, up 32% week on week, and 35% year on year, while selling of 116,000 tonnes to China – half for 2012-13, and half for next season.

Furthermore, the March lot gained technical help too, in moving decisively above its 100-day moving average.

It stayed there at the close too, for the first time in three months.

Dismal exports

If corn had the support of South American weather - and remember, a late Brazil soybean harvest threatens sowings of follow-on safrinha corn which represents half the crop – it lacked underpinning from export demand.

In fact, US exports, as measured by cargo inspections, were a measly 5.3m bushels, down 75% week on week and 87% year on year.

Furthermore, technically, the March lot struggled with the $7.35-a-bushel level which has been seen for some time as a key chart area, while fluffing a chance too to end over its 100-day moving average for the first time in three months.

March corn ended down 0.2% at $7.34 ¼ a bushel in Chicago.

Rain on the Plains

Wheat's export news was not so supportive either.

While the US at the weekend won an Egyptian tender, showing its competitive edge, the order was for a modest 60,000 tonnes, and there was some headscratching over the low level of the winning bid, which was $10 a tonne or more below rival offers.

US wheat exports (cargo inspections) came in at 15.2m bushels - not as disastrous as corn's, in falling 32% week on week, and 10% year on year, but below expectations nonetheless.

Meanwhile, weather forecasts put more rainfall into the forecast for drought-hurt winter wheat seedlings on the US Plains.

"The GFS weather model is pushing moisture through the Plains this weekend and that has pressured wheat values," Mr Holaday said.

He added: "There is significant disparity as to the amount and placement of this moisture. It will be watched closely as we move through the week."

Prices fall

With hard red winter wheat most affected by drought, and so standing to gain the most from rain, the grain fell particularly heavily, by 0.6% to $8.17 a bushel for March in Kansas, where it is traded – for now at least.

(CME Group, which has bought the Kansas City Board of Trade, announced June 28 as the last day of open outcry trading in Kansas, with the pits moving to Chicago, and electronic trading on the former trading floor until September.)

Chicago's March lot dropped 0.3% to $7.63 a bushel.

In Paris, March wheat dropped 0.4% to E247.50 a tonne, undermined by French wheat's convincing loss in the latest Egyptian tender.