It was hard work for risk assets to make headway on Tuesday. And that went for – most - agricultural commodities.

"It is a macro day," Roy Huckabay at Illinois-based grain broker Linn Group said.

Markets adopted a classic risk-off pose, with shares falling, by 1.5% on Wall Street in late deals, while the safe haven of the dollar added 0.4%.

The average commodity, as measured by the CRB index, lost 1.2%, and hit a two-month low, while some soft commodities shed significantly more.

Investors were scared in part by further disappointing results, including from US Kevlar-to-crop sprays group DuPont, besides in South Korea from steel giant Posco, while in Europe eurozone debt fears were reheated by a Moody's move.

The ratings agency downgraded five Spanish regions, including Andalucia and Catalonia, if reaffirming the ratings of five others, including that of Madrid itself.

Cotton drops

Among ags, New York cotton was one of the worst affected, tumbling 3.5% to 74.17 cents a pound, and hitting limit down at 73.93 cents a pound at one point, as fears of a supply squeeze caused by a late and poor-quality US harvest eased a touch.

Stocks certified for delivery against New York contracts held at 8,433 bales, low by historical standards, but higher than the low of 7,639 bales hit last week.

 And US data overnight showed the condition of the US crop holding steady at 42% rated "good" or "excellent", and with growers catching up on harvest too, at 38% completed, only 1 point behind the typical pace.

Negative signal

Other New York losers included December coffee, which dropped 2.2% to 160.85 cents a pound, as the weak markets deterred roasters which had been nibbling at the market from further purchases.

Raw sugar for March lost 2.0% to 19.65 cents a pound, its weakest close of the month – and slap on a technical support level.

"We have been watching out for a potential head-and-shoulders formation," a negative chart pattern, "developing, taking a line drawn from the high of 14 September at 21.00 cents a pound through the highs of 26 September and, 12 October and the last two sessions," Nick Penney at Sucden Financial said.

"This may represent a neckline through which values are struggling to break through.

"Should the low of 19.65 cents a pound be breached, there may be more pain on the downside for the bulls."

'Finding support'

So the falls in grains, against that backdrop, did not look so bad, even the 1.1% drop to $8.68 ¾ a bushel in Chicago wheat for December.

But then it does have some lingering support from "dry conditions in Australia, the Black Sea supplies shrinking, and Ukraine being out of the market starting November 15", US Commodities noted.

Commerzbank added: "The wheat price is also finding support just now from the dry weather conditions in the southern regions of the Great Plains in the US," with the crop in Kansas, the top producing state, rated by the US Department of Agriculture at a meagre 40% in "good" or "excellent" condition.

Chicago vs the rest

OK, not all the news on the grain is upbeat as the lower close would suggest, notably on exports, with the US deemed unlikely to win a place in an Iraqi wheat tender, highlighting its lack of competitiveness, yet, over other supplies.

"As the trade awaits the results of the recent Iraq wheat tender, US wheat export activity is basically confined to traditional hard wheat business," Benson Quinn Commodities said.

But the role of broader liquidation in the decline in Chicago wheat, the speculators' favourite, appeared highlighted by relatively weaker falls in other markets.

In Kansas, [hard red winter] wheat for December lost 0.9% to $9.07 ¾ a bushel, and in Minneapolis, [hard red spring] wheat shed 0.3% to $9.45 a bushel.

In Europe, London wheat for November eased 0.6% to £204.75 a tonne while Paris wheat for November, buoyed by a sagging euro, edged 0.1% higher to E263.25 a tonne.

US vs Brazil

Chicago corn for December outperformed its fellow grain, in falling a more modest 0.6% to $7.56 a bushel, gaining some support from continued firmness in US cash markets, now harvest is nearly over, and that source of easy supplies is drying.

Furthermore, "it is worth noting that South American corn offers are losing the competitive edge once held against US corn values", Benson Quinn Commodities said, noting that "talk that Brazil is not offering corn past December has gotten some attention".

Furthermore, the results of the USDA meeting with analysts on Monday, while restating the department's estimate of modest crop abandoned or cut for silage of 9.5% despite the drought, at least also highlighted the strength of feeling in the market that this figure is an underestimate.

'Demand is alive and well'

Still, soybeans did best of all, staging a late recovery to close up 0.5% at $15.53 ¼ a bushel for November delivery.

Signally, this represented a small gain, of 0.75 cents, over the January lot, which ended up 0.4% at $15.55 ¾ a bushel, at a time when investors are keenly monitoring the relative performance of different contracts for signs of the pressure needed to persuade farmers to open their silo doors.

A big support was a strong market for soymeal, which added 1.4% to $476.20 a short ton for December delivery.

"It seems the demand for US soybeans is alive and well, especially near the low side of the range," Benson Quinn said.

South America squabble

That helped offset pressure from, some, revived expectations for the South American harvests the world is looking for to fill a void left by poor worldwide crops in calendar 2012.

"The dry areas of central and northern Brazil are receiving moisture. The wet areas of southern Brazil and Argentina are expected to dry out," US Commodities said.

That said, not all observers are quite so upbeat.

"Trade is expressing concern that below-normal October rains in Mato Grosso Brazil will slow early planting and hence harvest of early soybeans, pushing more demand to the US," Richard Feltes at broker RJ O'Brien said.

'Unprecedented decline'

And Oil World sounded an upbeat note for prices prospects, forecasting a neet for hefty rationing.

"World exports of soybeans will suffer an unprecedented decline in September 2012 to February 2013," the analysis group said.

"We now forecast exports [during the period] at 38.0m tonnes, a four-year low and an impressive 4.8m tonnes below a year earlier.

 "This will require demand rationing, primarily in China, the world's largest importer of soybeans."