"It will be interesting to see if the buying late in the
session that we have seen recently occurs today," Darrell Holaday at broker Country
Futures mused, as Chicago futures headed weak into the last hour of trading.
The buying didn't arrive, leaving grains closing at three-week lows, and the
benchmark December wheat contract in particular doing something it has not done
since June 15.
That is, to fall beneath its 50-day moving average, at a
little under $8.78 a bushel, and indeed stay there, closing down 2.1% at $8.67 ¾
a bushel, its ninth negative finish in the last 10 sessions.
In Europe, Paris wheat for November lost 1.0% to end at
E260.00 a tonne, while London November wheat shed 0.4% to £203.65 a tonne.
Wheat's particular issue is that while Hurricane Isaac
proved a mixed blessing for many US crops - flattening Louisiana cotton for
instance, but calming enough by the time it reached the Midwest to give
Illinois soybeans just helpful moisture – it proved an unequivocal boon
for winter wheat.
As Dan Cekander, director of grain marketing analysis at
Newedge told Agrimoney.com, the rains did "a good deal to rebuild soil moisture" needed to get winter grain sowings off to a good start.
"Illinois had more
than three inches of rain – there is not a puddle anywhere. It just soaked in,"
he said, forecasting soft red winter sowing for the 2013 "will be higher" than
those for this year.
'Still very dry'
OK, winter wheat
conditions are still hardly ideal, with Gail Martell noting the shortfall in Kansas, the top wheat producing state.
"Kansas field moisture has improved with increasing showers
the past couple of weeks though conditions are still very dry," she said,
noting that 74% of topsoil in the
state was still "short" or "very short" of moisture as
of Sunday, according to US Department of Agriculture data.
"Rainfall needs to increase to fully replenish field
moisture following a hot, dry summer," she added.
"When field conditions are very dry, soil erosion is common.
Strong gusty winds in winter may claim a significant portion of wheat
particularly in Kansas' western crop districts where the climate is semi-arid."
'Rain needed soon'
But Texas A&M University nonetheless forecast a 2m-acre rise, to 58m acres, in overall US wheat sowings for the 2013 harvest, good news for users, but another
reason for bulls to stay on the sidelines.
Not that their cause is lost, given the background concerns
over the crop in Australia, which "is dry as we near key reproductive periods",
US Commodities noted.
UK grain merchant Frontier said: "Australian rainfall is
being watched with keen interest as August rainfall was a half of that normally
seen and warm temperatures are starting to reduce yield ideas.
"To get anywhere near the USDA estimate of 26m tonnes, rain
is needed soon. Can this key wheat exporter really escape the weather issues
that have plagued every other world producer?"
Take the money…
Nor did wheat receive much support from the row crops, which
were sapped by a feeling that growers are increasingly willing to settle for
current prices, enhancing the pressure on values seen anyway when combines roll
and supplies increase.
US Commodities added: "The big market inversions are sending
a signal to the producer to sell off the combine."
Newedge's Dan Cekander said "Farmers can get more than $8 a
bushel for corn off the combine. They are going to sell corn, and also soybeans, at $17
a bushel cash off the field.
"They have never been able to get these prices before."
Indeed, as Country Futures' Darrell Holaday noted, "the cash
basis is weakening and that is a concern".
Corn for December ended down 1.8% at $7.90 ¾ a bushel, and
this time not even soybeans, which have continued to set fresh records as
grains have eased, could hold out.
The November soybean contract lost 1.1% to $17.47 ½ a bushel,
feeling a technical headwind too.
"The technical picture in the soybean market became
extremely overbought early yesterday and the sell-off at this point is a
correction to that technical situation," Mr Holaday said.
Weakness was felt among many soft commodities too, such as New
York cotton, which felt pressure
from relatively low levels of damage to Hurricane Isaac, as revealed in USDA
data overnight, besides a caution from the International Cotton Advisory
Committee that demand destruction is "plaguing" the sector.
The December contract shed 0.4% to 75.35 cents a pound.
New York raw sugar
for October dropped 1.7% to a three-month low for a spot contract 19.01 cents a
pound, sapped by continued ideas of ample supplies, as signalled by an International Sugar Organization report on Friday.
"The sugar bulls still haven't managed to get a convincing
story together that threatens the prevailing Brazil/ global surplus story,"
Thomas Kujawa at Sucden Financial said.
"There was news of bad weather in Thailand on the wires and
a potential reduction in the previously estimated crop, but otherwise it's
still going nicely for the bears."
However, cocoa bucked
the trend, soaring 4.0% to $2,654 a tonne in New York, boosted by further
buying by speculators.
Besides concerns for the 2012-13 crop in West Africa, the
main growing area, where weather has not been ideal and there have been some
disease reports, Macquarie on Tuesday cautioned over the risk of a self-feeding price spiral upwards, thanks to the mechanics of the Ivory Coast marketing strategy.