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'
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
Data showing a 41% tumble in June in exports from Indonesia's
Sumatra region - reported last week by Agrimoney.com (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
"Some believe that the flow of fresh asalan will reduce
considerably after Ramadan and many predict the end of season will be in
Indonesia is the third ranked producer of robusta coffee, of
which asalan is a variety.
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.
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
'Funds continue to
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
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."
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.