Grain prices proved mixed Thursday as weather conditions across the main crop growing regions continued to dominate while traders in the US began to adjust position ahead of the long Labor day weekend.
Macro-economic as well as geo-political events were also at the forefront as political leaders continued to discuss the situation in Syria and what action - if any - should be taken following the suspected chemical attack near Damascus on August 21, in which hundreds of people are reported to have died.
The subject was discussed by the UK parliament, recalled especially from its summer break.
In the US, President Obama said he had not yet decided on a plan for action against Syria.
The tension in the region have led oil prices to climbing in recent sessions with the Brent crude contract for October delivery up as much as 10.7% this month, although the benchmark was off 0.5% in late trade.
Other safe-have assets have also been demand in recent session, but like oil have pared their gains today. Gold was off 0.8% near the close and the yield on the US 10-year was up by 0.4%.
The dollar meanwhile rallied in US trade as data showed the US economy expanded at a faster than forecast pace in the second quarter.
The US recorded growth of 2.5% compared with an estimated 2.3%.
An uptick in risk appetite in response led the FTSE 100 share index to close up 0.8%. The US Dow Jones Industrial Average and S&P500 indices both stood up around 0.8% in late trade.
Among agricultural commodities, soybean futures bucked a softer tone evident in other grain markets for much of the day, as weather concerns continued to keep prices at a premium.
"Looks like we're off to another day of adding risk premium to beans," noted Richard Feltes, VP of Research at R J O'Brien.
New crop soybeans for November spent much of the session in positive territory, hot, dry weather threatened to cause "damage to soybeans", before running into profit taking in late trade.
They closed down 0.3% a $13.68 ½ a bushel in Chicagofor November delivery.
"Soybeans remain a real concern," noted analysts at US Commodities, adding "soybeans are in need of a finishing rain."
Some rain is expected however, "no big soaking rains are forecast," noted one forecaster.
"Drought conditions increased considerably this past week," stated MDA Weather Services.
Forecasts project rain in the "far north western areas today, then favour north central areas Friday, and north western and east central areas Saturday and Sunday," MDA said, adding that "rains should improve moisture a bit in central and eastern areas, while improvements in western areas will be limited."
Projections suggest dry conditions will continue into next week.
Worsening projections, corn escapes
Crops generally have felt the effects of drought conditions, which have intensified and expanded in recent weeks.
"The past 14 days have been incredibly dry," reported Gail Martell of Martell Crop Projections.
As a result crop projections have been falling.
"Illinois crops deteriorated sharply last week, reflecting worsening drought. Corn and soybeans lost 5% in the good-excellent category while gaining 2-3% in poor-very poor," noted Martell.
Martell added Ohio remains the only major Midwest farm state with, "favourable prospects with 74% good-excellent in soybeans and 80% in corn".
Updated crop observations this week confirm that soybeans are suffering more than corn from late summer heat/dryness
"Corn was too far along before the heat for major damage," suggested US Commodities.
December corn futures reversed earlier pressure to stand up 0.2% at $4.81 ½ a bushel at the close.
Wheat futures were also lower across the day with December futures closing down 0.8% at $6.54 ¼ a bushel in late trade.
December contracts had been down over 1% in Chicago despite recent dry weather.
Players were also looks at Egypt who announced yesterday it had purchased 295,000 tonnes of Russian, Ukrainian and Romanian wheat for shipment in early October.
Brazil keeps sugar soft
The stronger dollar weighed on the soft complex across the day.
Raw sugar futures in New York closed down 0.4% at 16.37 cents a pound.
However, given the sweeteners lack of direction in recent sessions, coupled with the summer trading conditions traders lacked a clear outlook.
That said expectations of stronger supply growth continued to lend a bearish tone.
"With such a tight range it is difficult to come to any firm view," said Nick Penney, Senior Traders at Sucden Financial.
Mr Penney added, "We tend to be leaning on the short side given the trend in Brazilian production and the resulting hedging pressure seen the last time we went up to 17 cents a pound".
Coffee echoed the tone in sugar as New York Arabica futures stood down 0.7% at the close, settling at 117.65 cents a pound.
Analysts at Sucden Financial suggest further gains could target resistance at 122.63 cents a pound (40 Day moving average) and the recent high at 133.80 cents a pound.
Downside, immediate support was pegged near the 116.35-cents-a-pound area, although a break opens potential for further declines toward 110.00 cents a pound.
December cocoa futures were down a similar 0.8%, settling at $2,479 a tonne.