the script on Friday, making a negative start.
Fridays often bring price falls in weather markets, as
investors take profits ahead of a weekend when they will be unable to trade, at
a time when every forecast counts.
But corn and soybeans remained in an upswing, as an
official forecast on Thursday that dry US conditions are set to last next
month, and potentially into the autumn, eased concerns that a round of limited
Midwest rains might be the harbinger of something more substantial.
"Scattered rains in the Midwest US were of little help to
douse fears of the worst drought in 56 years," Lynette Tan at Phillip Futures
"Government forecasters said the probability of no relief is
high, and there is no reason to believe the situation will improve."
Shorter-term, weather prospects are hardly reassuring
"After the cold front pushes through the north east and eastern
Corn Belt on Friday and Saturday, the intense heat over the Plains and western Corn
Belt will begin to push back into the eastern Corn Belt July 21 and spread
slowly east towards the east coast by July 26-27," WxRisk.com said.
In theory, the weather picture looks particularly worrying
for soybeans, which still have some potential for revival, given that their
sensitive pod-filling period is later than corn's vulnerable pollination time, which
is largely past.
US corn has already been largely written off as a poor lot.
"If stress is relieved by late July, it is possible that
later-planted soybeans might set more pods and produce more yield than those
planted in April," University of Illinois crop sciences professor Emerson
However, he added that "while we remain more optimistic
about soybean prospects than about corn, soybean yield potential is beginning
to decline as time goes on without enough water to keep plants functioning well".
One impact of the lack of rain, for instance, has been less
expansive plants, "which in wider rows means that plants are unable to join
canopies across the rows," meaning a "reduced ability to intercept sunlight,
which will lower yield potential".
'$20 a bushel'
And that has spurred talk of elevated prices.
"Weather is the market driver and has soybeans as the upside
leader," Benson Quinn Commodities said.
"Until a real change in pattern is realised, the role of the
market will be to ration demand and encourage South American planting, with
planting season beginning in late September in Brazil and late October in
The rebound in spreads in the last session "implies more
upside with some technical traders now targeting at $20 a bushel".
Soybeans for August inched towards the target, adding 1.0%
to $17.51 ¾ a bushel as of 09:00 UK time (03:00) Chicago time, and indeed
setting a fresh record earlier for a spot contract of $17.54 a bushel.
November soybeans were 0.9% higher at $16.67 ½ a bushel.
China rumours ease
However, it was new crop corn which was the better performer,
gaining 1.5% to $7.89 ¼ a bushel as the speculation over Chinese sell-ons of
import orders, which undermined values in the last session, dissipated.
(Corn prices on the Dalian exchange itself were little
changed, easing 0.1% to 19,460 yuan a tonne for January.)
The September lot added 0.5% to $8.11 ½ a bushel, but has
failed yet to breach the record of $8.16 ¾ a bushel reached in the last
'Story of its own'
Still, that was better than wheat, which eased 0.6% to $9.29
¾ a bushel for September, although that had a bullish interpretation too, in
pointing to a crop showing greater independence from corn, which it has
followed for a large part of the year.
"The wheat market reeks of heavy fund participation and a
commodity that is building a supportive story of its own," Brian Henry at Benson
Quinn Commodities said, after the grain's particular gains in Chicago in the last
session, spurred by fund purchases of an estimated 7,000 lots.
"The support typically spilling over from the corn market
seems to be taking a backseat to global production concerns."
Indeed, wheat trading "was reminiscent" of that which, in
previous years, has preceded government export curbs.
"Regarding Russia and Ukraine there has been some of that
talk, but at this point the trade just has to be aware that it can happen."
Battle for 2013 acres
Soft commodities found headway difficult, on a day which had
a slight risk-off feel, with the safe haven of dollar edging a little higher, and shares losing ground, by 1.4% in Tokyo, 0.6% in Singapore and 0.2%
Still, the weak Indian monsoon offered some support to cotton and sugar, both crops of which the country is a big producer.
For cotton, "the late Indian monsoon and difficult growing
conditions in the US this season have raised the prospect for crop downgrades",
Luke Mathews at Commonwealth Bank of Australia said.
There is a 2013 battle for acres effect supporting the fibre
too, which edged 0.1% higher to 72.63 cents a pound in New York.
"Surging prices for corn/soybeans means cotton planted area
next year may fall significantly.
"These production concerns will continue to support prices,
despite the bleak global economic outlook."
Raw sugar was unchanged at 23.25 cents a pound for October
"Speculation that Indian officials may have a change in
heart on sugar exports, given the weak monsoon, remains supportive for global
prices," Mr Mathews said.
Phillip Futures' Lynette Tan added: "The line up of ships
waiting to load sugar in largest producer and exporter Brazil now stands at 87,
higher than 81 last week, further fuelling fears of a short-term supply shock