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Softs, rapeseed pull out of price decline. But not grains...

Agricultural commodity bears found the prevailing mood less in their favour on Tuesday, although the main Chicago contracts remained firmly in their grasp.

Many crops managed decent gains, including coffee, which added 1.1% to 179.25 cents a pound in New York for the September arabica contract.

The rise was attributed in part by the failure of a bear raid in the last session to take hold, with investors not willing, without further evidence, to embrace ideas that Brazil's coffee production was barely affected by the early-2014 drought.

Jack Scoville at Price Futures noted that "follow-through selling was limited and buying was found".

Decent Brazilian export data - up 24% year on year to 2.6m bags in June, according to the Cecafe exporters' council - were taken in a positive light too.

"End-users are showing a willingness to stock up on coffee as there are mounting concerns about both this year's crop and the 2015 crop," Citigroup's Sterling Smith said.

'Drier than normal'

Meanwhile, robusta coffee for September added 1.2% to $2,063 a tonne in London, retaking its 75-day and 100-day moving averages, helped in part by lingering concerns over production potential in Vietnam, the top producer of the variety.

"Vietnamese growing conditions have been drier than normal and it is possible that production for next year will be impacted," Mr Scoville said.

Data showing a 41% tumble in June in exports from Indonesia's Sumatra region - reported last week by (and to be fair, Reuters), and forecast by analyst Judith Ganes Chase some months ago - also re-emerged into the market with a report on Bloomberg of Volcafe comments last week.

Volcafe, highlighting signs of a sharp drop in Indonesian output this year, said that "there is a reluctance to sell forward among the exporters as some still have short positions to cover and others try to build a long position.

"Some believe that the flow of fresh asalan will reduce considerably after Ramadan and many predict the end of season will be in August/September."

Indonesia is the third ranked producer of robusta coffee, of which asalan is a variety.

Thai sale

In New York, raw sugar rose 1.0% to 17.68 cents a pound, underpinned by the ideas of a "sudden death" to Centre South Brazil's cane harvest, and with Thai sale results offering some support.

Premiums for the sugar from Thailand, the second largest exporter after Brazil, came in at 43-69 points over New York futures, ahead of the premiums of 10-20 points on the spot market in mid-June.

Still, the state-run Thai Cane and Sugar Corp did manage to get only 84,000 tonnes of sugar away at these levels, well below the 194,666 tonnes it had initially aimed to sell, according to reports.

Elsewhere among softs, cocoa for September gained 0.4% to £1,931 a tonne in London, ahead of data on the European grind for the second quarter, due on Thursday.

Canada worries

In grain and oilseed markets, the canola-rapeseed complex managed gains too, helped by growing ideas of the damage caused to Canadian crop prospects from excessive rains.

Sowings could end up 11% below the official forecast of 20.2m acres, and production some 10% down on last year's 18m tonnes, Canada-based ProMarket Wire said.

In Chicago, Richard Feltes at RJ O'Brien said that "excess moisture in south east Canada may trim 2014 canola crop to 15.5m-16m tonnes".

Canola for November closed up 0.7% at Can$462.60 a tonne in Winnipeg, ending back above its 10-day and 20-day moving averages.

In Paris, best-traded rapeseed for November set a fresh contract low of E335.00 a tonne only to end at E339.00 a tonne, a gain of 0.6%.

The August contract hit a fresh four-year low, for a spot contract, of E333.25 a tonne, before closing at E335.75 a tonne, a gain of 0.4%.

'Simply no appetite'

But bears held sway over other grains and oilseeds, noticeably soybeans, which for August delivery tumbled 1.9% to $12.48 ½ a bushel, the weakest finish for a nearest-but-one contract in 11 months.

The contract is now down 9.4% since the US Department of Agriculture on June 30 revealed that US stocks of the oilseed were not quite as tight as had been thought, while hiking its expectations for sowings this year to a record by far of 84.8m acres.

"There is simply no appetite for old crop soybean inventories at these price levels," said Darrell Holaday at Country Futures.

"The July and August contracts continue to be in major long liquidation mode."

'Funds continue to liquidate…'

The new crop November soybean contract fell a more leisurely 0.8% to $11.16 ¼ a bushel, but is believed to be getting some support from the unwinding of long old crop-short new crop spreads which will provide only temporary support.

With sowings so strong, Midwest growing weather deemed broadly ideal, and the US crop currently one of the best-rated ever in condition terms, the US is expected easily to set record production.

"Growing weather is non-threatening with ample moisture and moderately warm temperatures," CHS Hedging said.

Benson Quinn Commodities said: "I am not sure things could be any better for the bulk of corn and soybean crops."

Citigroup's Sterling Smith said: "Funds continue to liquidate long positions and the weather again paints a perfect picture of rain and sunshine over the next 10 days."

Four-year low

This pressure was felt in the corn market too, where the new crop December contract dropped 0.5% to $4.04 ½ a bushel, at least showing some resistance to falling below $4 a bushel for the first time, managing some recovery from a contract low of $4.02 ¾ a bushel.

There were a few scraps for bulls to hold on to, with the rating of the US corn crop revealed overnight as steady, rather than improving, although at a heady 75% seen as in good or excellent condition.

There is some hope that funds have got most, if not all, of their selling in the grain done.

Still, the old crop September contract did end below $4 a bushel, down 0.6% at $3.98 ¼ a bushel, the lowest finish for a nearest-but-one contract for nigh-on four years.

'Much better quality'

That was nearly the case for Chicago soft red winter wheat too, with the September contract ending down 0.1% at $5.56 ¼ a bushel, within a fraction of its own four-year low.

Dry weather is speeding the US winter wheat harvest, and reducing rumours of rain damage to ripe grains.

"There is talk that the soft red winter wheat harvest has gotten into a sample of much better quality than the early harvest," Benson Quinn Commodities said.

Furthermore, results from the early Russian grains harvest are strong too, with early yields at 3.97 tonnes a hectare, from 3.37 tonnes a hectare at the same point last year, according to the Ikar consultancy.

'Poor monsoon rains'

Still, there were some factors offering a little support too, not least the fact that futures are considered well oversold, but also a relatively cautious estimate of the French harvest from the country's farm ministry.

There are fears over rain damage to crops too

Paris milling wheat for November outperformed in rising by 0.4% to E183.25 a tonne, although London feed wheat dropped 0.2% to £133.00 a tonne, setting a contract low of £132.00 a tonne earlier.

But then rain damage, while hitting supplies of wheat for bread, will support supplies of feed quality grain.

The weak start to the Indian monsoon remains a little bit of a concern too.

"Poor monsoon rains in India is raising worries about production and total supplies leading the India government to suspend its selling of state owned reserves," CHS Hedging said.

Weather underpins hopes for huge US corn crop
France issues downbeat wheat harvest forecast
Morning markets: grains stage, minor, turnaround Tuesday
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