Agricultural commodities may have started the day firmly
enough, but by the close had rebooted back to their more negative form which
has dominated for the last month or more.
There were exceptions.
Raw sugar for
July gained 0.4% to 17.10 cents a pound in New York, helped by regulatory data
showing a further large turn bearish in hedge fund positioning on the sweetener
in the week to last Tuesday.
The data were "viewed as bullish as the funds have put on a
decent sized short over the reporting period, although they remain net long as
a bloc", Thomas Kujawa, co-head of Sucden's softs desk, said.
Australia-based Green Pool reported a "perception that
summer demand [for sugar] is finally picking up".
'Force an exit'
Also in New York, cotton
for July added 0.8% to 87.65 cents a pound, with Citigroup's Sterling Smith
noting that "some early mill demand was seen lifting values.
"First notice day is rapidly approaching and this will force
an exit either into the new crop futures or out of the market."
While Chinese import data showed purchases down 45% year on
year last month to 191,500 tonnes, the figure could have been worse, Commerzbank
said, flagging an upgrade by 750,000 to 13.5m bales last week in the US
Department of Agriculture's estimate for the country's buy-ins.
Still, "the outlook, on the other hand, is becoming
increasingly gloomy", the bank added, flagging a USDA upgrade by 500,000 bales
to 8m bales in the forecast for Chinese imports in 2014-15, which starts in
Furthermore, western parts of Texas received rain at the
weekend, boosting prospects for spring-sown crops such as cotton.
New crop cotton for December fell 0.8% to 77.75 cents a
And falls were largely the trend in ag commodity markets,
with sentiment in Chicago grains and oilseeds badly dented by the inability of
some bullish demand data to hold up prices.
The US Department of Agriculture showed weekly US soybean exports
at 215,619 tonnes last week, well up from the 124,242 tonnes the month before.
The Nopa industry group showed the US crush at 128.8m
bushels last month, down from 132.67m bushels in April, but well above
expectations of a figure just under 127m bushels.
The data "sparked a rally", Darrell Holaday at Country
Futures said, adding that it "could not hold".
Was the figure too good?
"That much crush indicates there is a good supply of soymeal and the soymeal futures broke. The
soybean complex seems to no longer be able to hold rallies on supportive news."
Certainly, the idea of strong soymeal supplies tallied with
observations of a weaker cash market in parts of the Midwest, with demand
viewed as particularly soft east of the Mississippi river.
Soymeal futures themselves dropped 1.2% to $462.40 a short
ton for July delivery, the weakest close for a spot contract in getting on for
And as an extra setback for soybeans, expectations grew of
an increase in the already-high crop rating figure when the USDA later reveals
a weekly update.
Traders expect an increase of 1-2 points in the proportion
of the US crop rated "good" or "excellent", from the 74% last Monday.
Soybeans for July ended 0.3% lower at $14.25 ¾ a bushel,
while the new crop November lot shed 0.4% to $12.17 a bushel, ending back below
its 10-day moving average.
'Touch drier weather
The weekly US crop progress data are also expected to show improvement
in the corn crop, currently rated
75% "good" or "excellent", but expected to show an increase of 1-2 points.
The US weather is universally seen as benign, with warmer
weather this week for much of the Midwest viewed as likely boosting development
rather than invoking any threat of dryness.
"Various extended weather models offer a touch drier weather
forecast, but there is no sign of an extended period of threatening weather,
Benson Quinn Commodities said.
"Expect plenty of sunshine, but warmer temperatures would be
welcome in many areas."
CHS Hedging said: "I know this is becoming repetitive, but
weather forecasts are shaping up to be nearly ideal over the next two weeks."
'Funds unwilling to
There was some somewhat helpful US export data, showing
shipments of 1.10m tonnes last week, down 1.15m tonnes on the previous week,
but still a decent figure.
(Compare with that a year before, when the US was still
suffering the after effects of the drought-2012 harvest, and when shipments
were less than 360,000 tonnes for the same week.)
There was also some idea of producers being reluctant to
sell at current prices and, as Richard Feltes at RJ O'Brien said, being "preoccupied
with top dressing corn".
Citigroup noting that "funds are unwilling to liquidate
below the $4.40-a-bushel level currently", also flagging "some dryness concerns
for unirrigated crops in China's Yellow River basin".
Corn in fact closed just above $4.40 a bushel - at $4.41 a
bushel for the old crop July contract, down 1.3% on the day, and at $4.42 a
bushel for the new crop December lot, down 1.2%.
better in terms of percentage decline, dropped 0.9% in Chicago for July delivery.
But in closing at $5.81 a bushel it created a worse
comparative, in ending at a four-month low for a spot contract.
One negative was an idea of drier weather ahead for parts of
the US Plains where harvest is ramping up, potentially allowing farmers some
"Harvest delay as a result of an active weather pattern in
the southern Plains and southern Midwest has gotten the attention of would be
sellers," Benson Quinn Commodities said.
"Forecasts indicate the potential for better harvest
progress through the course of this week."
'Concerns about dryness'
Soft US weekly wheat exports hardly helped, coming in at
396,437 tonnes, down from 519, 363 tonnes the previous week, and 587,678 tonnes
the same week of 2013.
That overcame some of the bullish items in the wheat pit,
including the continued focus on a dearth of rain in parts of Russia.
"There are some concerns about dryness in the Volga river
basin," Citigroup's Sterling Smith said.
"The area will is forecast to see some rains later this week.
However, follow-up rains will be needed."
Mixed European prices
Still, futures managed some gains in Paris, nearer the
Russian worry, and which has not suffered the same level of export concern as the
Furthermore, the condition of the French soft wheat crop
fell 2 points last week, if to a still strong 72% rated good or excellent.
Wheat for November gained 0.3% to E187.75 a tonne.
London feed wheat fell 0.3% to £136.55 a tonne, setting a contract
low of £136.50 a tonne at one point, despite the positive of a potential demand
boost, for milling wheat, through a "major drive" by UK breakfast cereals group
Weetabix to "break into the Chinese market".
"If successful, demand for products such as Weetabix, the
UK's biggest selling breakfast cereal, Alpen, Ready Brek and Weetos could soar,"
and with it demand for local milling wheat, said Gleadell, the UK grain merchant
which supplies to Weetabix.