So the weather has turned milder in the Midwest, but not by
enough to take the heat out of the grains market.
Many financial markets made a poor start to the week, sapped
by Friday's poor US jobs figure, although
A better-than-expected Chinese inflation figure for June, of
2.2% compared with 3.0% in May, was also open to negative interpretation, in potentially
a result of a fast-slowing economy.
Certainly, Wen Jiabao, China's premier, said on Sunday that
pressure on the country's economy is still "relatively large".
Shanghai stocks stood 2.4% lower in late deals, while Tokyo
shares closed down 1.4%, Seoul stocks 1.2% and Sydney shares down 1.0%.
But grains, again, managed to escape a soaking, protected by
concerns over the damage that drought and heat have done to crops, and fears
that a break in the weather might not be as benign as peviously billed.
In fact, forecasters have promised cooler temperatures -
after another weekend of hot temperatures expected to ensure a further fall in
US official weekly crop ratings, due late on Monday.
However, as regards closing the Midwest moisture deficit, "There
is some good news and some not good news", David Tolleris at WxRisk.com said.
"The good news is that the southern portions of the eastern Corn
Belt and southern Missouri will see good rains over the next five days," he
"But to the north the central and northern eastern Corn Belt
and most of the western Corn Belt will see lower temperatures and a lot less rain."
Heat to return?
At ABN Amro, analyst Charlie Sernatinger put it so: "The
good news for this week is that temperatures are due to slip back from last week's
"The bad news is that all of the rain forecast is for the
southern third of the nation."
And, mid-month, models show "the heat tries to make a
comeback", Mr Tolleris said.
Besides, at Lynnette Tan at Phillip Futures said, the cooler
temperatures for now "may be too late to reverse the damage done to the
withering corn crops".
Furthermore, this was not the only weather situation the
grains market had to factor in.
Another is the violent breaking of a dry spell in southern
Russia, which has caused flooding which has killed at least 170 people, and
disrupted shipments out of the port of Novorossiysk.
More rains are due today and tomorrow.
"Recent flooding may have affected already harvested winter
wheat where storage terminals were flooded as well as the remaining unharvested
winter crops as well as the corn and sunflower crops," Rory Deverell at FCStone
Meanwhile, in France and the UK, further rain is also due "through
to the midweek to maintain the disease and toxin concerns" in crops suffering
from excessive moisture.
The impact of all this in Chicago was to send December corn futures flying to a contract high
of $7.19 a bushel as of 09:00 UK time (03:00 Chicago time), while the thinly-traded
July contract added 2.5% to $7.62 a bushel.
In soybeans, the
November contract hit a contract high of $15.45 ¾ a bushel, before easing to $15.44
¼ a bushel.
And September wheat
added 2.3% to $8.24 ½ a bushel.
"Wheat would certainly seem to have hit prices higher than
fundamentals would suggest, but if corn keeps going higher, so will wheat,"
Mike Mawdsley at Market 1 said.
Elsewhere, the weather fears helped Kuala Lumpur palm oil, in threatening supplies of
rival vegetable oil soyoil.
The September lot added 1.0% to 3,162 ringgit a tonne, with
the shortfall in India's monsoon rains also adding power to bulls' elbows, in
signalling a potential boost to vegetable oil imports from an already-large
But Tokyo rubber
took its cue from the macroeconomic mood, falling 2.4% to 249.00 yen a
In New York, raw sugar
for October soared 0.5% to 22.36 cents a pound, boosted by the rain slowing
Brazil's cane harvest, and sugar logistics.
Phillip Futures' Lynette Tan said: "Investors and traders in
the sugar market are betting on temporary price spike due to temporary supply
disruptions, as more news of delayed harvesting, delayed loading and delayed
crushing hit the markets.
"The extra moisture could also potentially affect sugar