It was a difficult day in many markets, what with concerns
over Portugal's largest listed bank, Banco Espirito Santo, whose shares were
suspended after falling more than 17%.
The suspension was attributed to "ongoing material
difficulties", at Espirito Santo International, major shareholder in a group
which owns 25% of BES, and to which that group is also exposed.
Shares tumbled 0.7%
in London and 1.5% in Frankfurt on this reminder of eurozone financial
difficulties, although losses in Wall Street stocks were less notable.
'Pulled moisture out'
But any hopes that lower shares might imply higher grain
prices, a theme around earlier in 2014, were given only a swift hearing, with an
early rally failing, and leaving futures nursing a fresh set of multi-month/year
Not that there weren't, on the face of it, some reasons for
optimism, such as a turn drier in the US weather outlook.
"We are somewhat surprised that the GFS model has not
spurred some buying," said Darrell Holaday at Country Futures.
"The model has clearly pulled moisture out of the north west
Corn Belt area for the next 10 days," with dryness not ideal for corn at this crucial, pollination time
Indeed, "corn is entering a high-moisture demand period as
the crop begins the critical pollination stage," said Gail Martell at Martell
"It is difficult for corn to get too much rainfall as this
is a period of tremendous physiological activity demanding extra moisture and nutrients
for optimum yields."
Still, the north west Corn Belt of course has had something
of a head start in terms of moisture, with the heavy rainfall until late, and
the overall US weather outlook is still viewed as "ideal".
Another apparently strong sign was the US export sales data
which for old crop corn, at 363,000 tonnes, was up 25% week on week, and 36%
above the previous four-week average, the US Department of Agriculture said.
Nonetheless, ideas of end users scrambling to exploit the
lower prices currently being seen were undermined somewhat by a large cancellation
in the small print, of 424,900 tonnes which had been ordered
by "unknown", plus a further 60,600 tonnes in imports ditched by China.
China seems a perennial disappointment,
in terms of its import purchases falling short of hopes in Chicago.
And then there is the prospect of the
USDA's Wasde report on Friday, part of a series which, being influential for
prices, often sees investors take a cautious line and take profits beforehand.
With short positions the ones showing
profits, pre-Wasde position closing would imply upward pressure on prices.
to the bottom'
And there was some earlier on, when grain
futures, even corn, stepped a reasonable distance into positive territory.
But the extent of the bearish sentiment
proved too much.
With ever higher hopes for the US corn
yield this year, "there is not much incentive to put a bottom in the market", Jerry
Gidel, chief feed grains analyst at Chicago broker Rice Dairy, told
"You are in the kind of market where you
may have only two people wanting to sell, but that is two too many.
"Everyone seems in a race to the bottom,"
in price terms.
And as for what that bottom might be, the
figure of $3.50 a bushel for corn is "definitely out there", Mr Gidel said, as
Agrimoney.com highlighted on Wednesday.
September corn futures inched closer by falling
1.3% to $3.86 ¼ a bushel, the lowest for a nearest-but-one contract in Chicago
for four years.
New crop December futures fell 1.3% to $3.92
¾ a bushel, a fresh contract closing low.
oils buck the trend
Nor could soybeans manage headway, against the broadly non-threatening US weather,
and expectations in the Wasde of upgrades to estimates for US stocks of the
oilseed, both for 2013-14 and 2014-15, following the surprise inventory and acreage
data revealed last week.
US export sales last week were actually
OK, at 56,300 tonnes for old crop. That took the total sold or already exported
in 2013-14, which ends next month, more than 2m tonnes above the USDA forecast.
For 2014-15, they came in at 526,500
tonnes, the best new crop figure since mid-May.
And there was the strength in the
vegetable oil complex too instilled by a drop in Malaysian palm oil stocks,
which helped a 0.9% revival to 37.48 cents a pound in Chicago soyoil futures for August.
Still, August soybeans dropped 1.1% to
$12.32 ¾ a bushel, and new crop November soybeans down 1.0% at $10.93 a bushel
- their first close below $11 a bushel since November 2010.
meanwhile, it was particularly Kansas City hard red winter wheat which suffered,
ending down 0.9% at $6.47 ¼ a bushel for September.
The US winter wheat harvest is turning
out less dismal than initially forecast.
"As US hard red
winter wheat and soft red winter wheat harvest moves north, quality
seems to be holding better than expected considering the ample rains received,"
CHS Hedging said.
Kansas City hard wheat is more vulnerable to the broader fund selling currently
in train thanks to the net long position they still hold, 22,887 lots as of
Tuesday last week, compared with a net short of more than 40,000 contracts in Chicago
soft red winter wheat.
Indeed, soft red winter wheat for
September ended down a relatively small 0.5% at $5.48 ½ a bushel, cutting its
discount to Kansas City wheat below $1 a bushel.
Among soft commodities, cotton suffered from the ideas of
tomorrow's Wasde proving bearish for the fibre, in lifting estimates for the US
harvest, and dropped despite some decent export data.
The US sold 67,602 running bales of cotton
last week for delivery this season, which ends in three weeks,
And it sold 203,242 running bales of new
crop, more than triple the volume the week before, and only some 400 running
bales from making it the best week for 2014-15.
Still, December cotton ended down 1.6% a
68.55 cents a pound in New York, only a fraction above setting a contract closing
sugar dropped 0.8% to 17.29 cents a pound for October, closing fractionally
in advance of data showing a further pick-up in Brazilian Centre South
production, in the second half of June, but thanks to dryness expected to take
a toll later in the season.
But it was arabica coffee which actually performed worst of all, dropping 5.7%
to 163.00 cents a pound for September delivery, the contract's worst close in
nearly five months.
Was there a pick-up in selling as Brazil's
exit from the World Cup left producers to return to the day job?
Weather was largely blamed for the
decline, with forecasts for dry weather ahead for the Brazilian coffee belt, implying
a rapid harvest, and pressure on prices from ramped up supplies.
Furthermore, there is no forecast, currently,
for frost, a threat at this time of year.
Meanwhile, cocoa ended down 0.2% at $3,081 a tonne in New York, and gained 0.2%
higher at £1,915 a tonne in London, despite some downbeat European processing
Many investors have put a stay of
execution over the market pending statistics from other regions, to see if grinding
is being switched to, especially, Asia.