Ag markets came nowhere near the record-breaking performance
of shares, which pushed the Dow Jones Industrial Average above 22,000 for the
first time, helped by a boost to sentiment from well-received Apple results.
But gains were the order of the day, if not obligatory, in
both grain and soft commodities markets, with arabica coffee notably firm, adding 1.8% to 140.35 cents a pound
for September delivery, a fresh three-month high for the contract.
The December lot added 1.8% to 144.05 cents a pound.
The gains were attributed by, besides lingering concerns
over the quality of Brazil's harvest following reports of insect outbreaks, technical
"The indicators favour the upside," said Sucden Financial
earlier in the session.
"Yesterday's spike below 140 cents a pound [December basis] and
quick recovery suggests appetite for higher prices.
"However, resistance around 143 is strong," if not as strong
as might have been expected to judge by the higher close.
'Some crops are lost'
Raw sugar futures
were a bit more mixed – along with price recommendations, with Bcom taking a
positive view, while Societe Generale analysis of risk pricing suggested easing
in futures to come.
The October contract eased 0.6% to 14.79 cents a pound, but
some more distant contracts performed better.
fared better, adding 1.5% to 70.34 cents a pound for December delivery, closing
above the psychologically important 70 cents-a-pound mark for the first time
since mid-June, helped by worries over heavy rains in major Indian growing
"Some crops are lost in the worst hit areas of the northwest
parts of India," said Jack Scoville at Futures International.
At Commonwealth Bank of Australia, Tobin Gorey also flagged
the support to prices from a falling dollar,
which indeed fell a further 0.2% against a basket of currencies, and at one
point hit a 15-month low.
"Investors seem to keep on buying back earlier sales still
and are bidding up prices to find pockets of producer and trade selling," Mr
"Those sellers seem to understand they can be patient while
they have a dollar tailwind at their back," with a weaker dollar making
dollar-denominated exports more competitive.
'Gaps the rainfall
And it was a help too to cotton that fellow row crops corn and soybeans gained too in Chicago, as investors reckoned that enough
risk premium had been removed from values for now to account for an improved Midwest
weather outlook – although one which remains imperfect.
"During the next five days all areas of the Plains and the Midwest will see some sort of be some
rain and some areas will see significant rain," said WxRisk.com.
"But there will also be some gaps the rainfall shield. The
midday Canadian and GFS weather models indicate not much rain falling from
western half of Iowa into central Nebraska, and some gaps in the rainfall
coverage over the eastern Corn Belt."
This afternoon overnight rains disappointed some investors.
CHS Hedging said that "a couple of light showers brought rains,
generally less than 0.25 inches, to about 20% of the US Corn Belt yesterday and
Besides, in soybeans, there is growing talk that the US
Department of Agriculture will, in its next Wasde crop report, next week, trim
its estimate for domestic soybean stocks at the close of 2016-17 (which
finishes at the end of this month) to account for buoyant US exports.
Richard Feltes at RJ O'Brien said that the soybean market
was in a bit of a quandary.
It was "grappling with the risk associated with sub-par
precipitation in some areas, small soy plant height and late planting on one
hand, versus better-than-expected soy yields in recent years amid improved
genetics, and the ability of plants to capitalise on late-summer rains".
Meanwhile, Archer Daniels Midland boss Juan Luciano offered
reassurance over US soybean exports for 2017-18.
Soybean futures for November added 0.4% to $9.77 ½ a bushel,
climbing back over their 40-day moving average.
"The sell-off yesterday in the soy complex seemed a bit
overdone considering we still have an entire month of weather to watch, and US
export offers are competitive with South America during a time in which they
shouldn't be," (ie just after the Brazilian harvest, and ahead of the US one), said
Tregg Cronin at Halo Commodity Company.
Corn futures added
0.6% to $3.79 a bushel for December, outperforming in part because the
forthcoming US weather is a bit less significant for the grain – for which pollination,
largely in July, is a big event.
And in July, "there was a significant amount of variability
in the weather observed across the Corn Belt," as MDA reminded investors, "particularly
with regards to precipitation.
While temperatures were "generally near seasonal levels
across the eastern corn belt… above-normal temperatures prevailed across the
western Corn Belt, especially in the northern Plains", MDA said.
"Heat stress during pollination of the corn crop was most
likely in the Dakotas, Nebraska, southern and western Iowa, south western
Illinois, Missouri, and Kansas."
On the demand side, US ethanol production data for last week
were no so impressive, falling 10,000 barrels per day to 1.002m barrels per day.
However, winter wheat
futures failed to follow their fellow grain higher, with the Chicago September
contract easing 0.5 cents to $4.60 ¾ a bushel - and that after a late session
And the loss came also despite a 0.6% rise to $7.35 ¼ a
bushel in the best-traded Minneapolis December spring wheat contract.
Some weather improvements in Australia were not helpful for the
Chicago contract, the world benchmark, with MDA saying that "rains should
improve moisture for wheat in Victoria, South Australia, and New South Wales"
this week, although "dryness will continue in Queensland".
And in Canada, where dryness has also been a problem, "showers
should improve moisture a bit in south eastern Saskatchewan and central Alberta".
Then there are upgrades to Russia's crop to factor in too.
"Russia's wheat production is now expected to be a record 76m-78m
tonnes, so no problems there," said Darrell Holaday at Country Futures.
"And the concern that was developing a couple of weeks ago about
wet conditions in the EU wheat areas has subsided with better conditions."
It may be that funds are reverting to their favoured short
position, of late, on Chicago wheat.
Still, Halo's Tregg Cronin flagged caution at getting too
bearish, saying that the market "looks stout here after the correction, considering
farmgate selling has slowed, northern Plains selling off the combine should be
minimal, Canadian crop prospects are still getting smaller and US wheat is
competitive against Europe".