This time, it was cotton
and wheat's turn to hold firmest.
Most agricultural commodities got off to a negative start of
the week, alongside external markets, which were dented by concerns about the eurozone,
and in particular over whether Spain might request a bailout, amid continuing
Brent crude and
London copper got off to weak
starts, while the safe haven of the dollar
added 0.3%, making dollar-denominated assets such as many commodities that much
less affordable to buyers in other currencies.
But cotton bucked
the trend, adding 0.6% to 71.89 cents a pound for New York's December lot as of
09:20 UK time (04:20 New York time, 03:20 Chicago time).
It was helped by a positive return from holiday for the
fibre in China, where the Zhengzhou's January lot, closed last week like other
Chinese exchanges, added 0.8% to 19,440 yuan a tonne.
Furthermore, while cotton is in the harvest period when
prices typically come under pressure as fresh supplies ramp up, New York investors
may be reluctant to pile on further short positions, given the amount already taken
Regulatory data late on Friday showed that speculators had
as of October 2 rebuilt a negative position in cotton, the largest since June,
with a massive increase of more than 11,000 short contracts.
And this ahead of further selling reported later in the
Substantial speculative net short positions typically prompt
some caution over where further selling pressure will come from.
'Crops will benefit'
In Chicago, wheat's speculative dynamics were less extreme,
with managed money cutting its net long position in Chicago contracts by some
7,100 lots to 58,197 contracts, the lowest since July but still historically sizeable.
And there are concerns about a slowdown in import orders.
"In the global wheat markets, there is a puzzling lack of
export demand for wheat despite reports of smaller crops in the Black Sea
Region and Australia, and this silence in interest has been pressuring wheat
prices to levels that seem unjustified by its fundamentals," Lynette Tan at
Phillip Futures said.
But in the grain's favour on Monday were more concerns over the
crop Australia, where dryness remains a worry.
Sure, parts of Victoria and New South Wales received rains
over the weekend, of more than one inch in places.
"Crops will benefit from the rainfall," Luke Mathews at
Commonwealth Bank of Australia said.
However, Mr Mathews, who on Friday forecast a drop of nearly 30% in Australian wheat exports in 2012-13, added that "the remainder of the
country remained mostly dry".
Furthermore, "only light, scattered rain is forecast for the
east coast this week, while Western Australia is expected to be dry".
Chicago wheat for December dipped in and out of positive
territory, before easing to stand 0.25 cents lower at $8.57 ¼ a bushel.
Among Chicago's less-traded grains, oats edged higher too, by 0.3% to $3.68 ¼ a bushel.
However, the exchange's signature row crops, corn and soybeans, got off to weak starts, pressed by the prospect of the US
Department of Agriculture's next Wasde crop report on Thursday, which is
expected to lift the estimate for the domestic crop of the oilseed, at least,
besides boosting demand, after a string of US export sales.
"Exports will be increased Thursday, but how much will
supply be increased?" Mike Mawdsley at Market 1 asked.
Allendale and Informa Economics were among the latest
commentators, on Friday, to forecast upgrades to the US soybean crop after rains helped
yields recover a touch.
OK, not all the news for the complex is bearish, with talk
that last week's hefty cut by Statistics Canada to its estimate for the domestic
canola crop may not be the last.
"There is speculation that the StatsCan report may not have
fully accounted for the recent wind damage, implying further downgrades could
be forthcoming," Mr Mathews said.
However, on the more negative side, palm oil dropped 0.8% in Kuala Lumpur to 2,396 ringgit a tonne after
the oilseed performed poorly on China's Dalian exchange following the week's
holiday, dropping 4.6% to 6,872 yuan a tonne.
And it is a semi-holiday in the US too, Columbus Day, which
is not universally celebrated, but may put a bit of a dampener on the mood and
volumes on US markets.
Soybeans for November dropped 0.8% to $15.37 ¾ a bushel.
'Too many long positions
For corn, estimates for Thursday's Wasde are broader
pitched, with analysts not even agreeing if the USDA is likely to raise or
lower its yield forecast.
On top of that, there is the potential for a higher sowings
figure, but also a raised abandonment rate, following the summer drought.
However, definite worries include the dearth of US exports
and the large speculative fund position, which saw a small net addition in the
"Corn is trading like there are still too many long positions
at work," said Brian Henry at Benson Quinn Commodities, also noting that "the corn
market is going to need some sign of better demand" to hold firm.
Chicago's December lot eased 1.0% to $7.40 ¾ a bushel.