Soybean prices set a fresh record high, as fears for South American sowings added to the concerns over damage to US crops from Hurricane Isaac, while export data quelled ideas that high values had curtailed demand.

Ideas that futures were set for a calm end to the week, ahead of the meeting of central bankers in Jackson Hole and with a long US weekend ahead, disappeared as Hurricane Isaac landed heavy rains on some southern crop producing areas, while forcing 100-degrees-Fahrenheit temperatures in the north.

"I thought we would just chop along into the end of the month," Richard Feltes at broker RJ O'Brien told Agrimoney.com.

"But people are concerned about the heat in the north west and too much rain in south western states."

'More worrisome'

Furthermore, "it looks as if Brazil's sowing season is going to make a dry start because of dry weather".

Michael Cordonnier, the respected crop scout, told Agrimoney.com that, with two weeks to go before the sowing season, conditions are dry in Mato Grosso, Brazil's top soybean growing state, and with no sign of rains in the forecast.

Further ahead, ideas that the El Nino weather pattern may prove a weak one, as signalled by Australian meteorologists, have cut hopes for a bumper soybean harvest to replenish supplies diminished by drought to both the ongoing US crop and the South American one harvested earlier this year.

"The idea the El Nino may be mild, or not come at all, has got everybody quite concerned," Dr Cordonnier said.

"Weather in both North America and South America is more worrisome than in looked even a week ago."

WxRisk.com said: "The developing drought over Brazil is the main story and it will continue to be until the El Nino finally begins to affect the overall global atmosphere of pattern.

For the next week "rainfall again will remain non-existent across all of Brazil extending into all of Paraguay and into northern Argentina", the weather service said.

'Very solid number'

Furthermore, US soybean export sales data eased concerns that prices had risen far enough to choke off demand, coming in at 721,000 tonnes old crop and new combined, in line within expectations, and higher than year-ago levels despite high prices.

"The lack of rationing in the soybean complex is what is behind the grind higher" in prices, Darrell Holaday a Country Futures said.

"There is no better example of that than the US soybean export sales," which he termed a "very solid number".

Chicago soybeans for September hit a record high, for a spot contract, of \$17.80 ¾ a bushel before easing to stand at \$17.70 ¼ a bushel, up 0.4% on the day, with some 45 minutes of trading to go.

The better-traded November contract hit a contract high of \$17.71 ¼ a bushel, before easing to \$17.63 ½ a bushel, a gain of 0.6%.

Another Russia downgrade

However, those end-of-month concerns returned to land wheat in negative territory in the dying trades, after a day which it had spent mainly in positive ground.

Sure, there are waning ideas that a Russian agriculture ministry meeting on Friday will result in export curbs.

The prospect of curbs was downplayed both by Ilya Shestakov, deputy agriculture minister, and Maxim Basov, the chief executive of agricultural giant Ros Agro.

However, SovEcon cut further its forecast for the Russian wheat harvest, by 1m tonnes to 38m tonnes, cutting further the country's exportable surplus.

And concerns for Australian harvest are growing, with official meteorologists there cautioning of dry weather even if the El Nino, which itself threatens lower-than-average rains in the east, does not appear.

'Getting into feed channels'

Furthermore, demand signals were signalling green too, with weekly US export sales 500,000 tonnes, in line with expectations, and talk of buoyant domestic consumption too.

"Some wheat is getting into the feed channels amongst Texas and Colorado feed users," Mr Feltes said, even with the early corn harvest having replenished supplies.

Still, Chicago wheat for December returned some of the gains of the last session, ending down 0.4% at \$9.03 a bushel. Kansas [hard red winter] wheat for December lost 0.7% to \$9.22 a bushel, with US rains refreshing dry seed beds ahead of the winter wheat sowing season.

Earlier, Paris wheat for November closed up 0.7% at E266.75 a tonne, while London's November lot added 0.6% at E206.00 a tonne, underpinned by data showing continued setbacks to the UK harvest, and a drop to a 12-year low in on-farm stocks.

'Some rationing has occurred'

Corn was weakest of Chicago's big three crops, ending 0.6% lower at \$8.08 ½ a bushel for the best-traded December contract.

But then corn export sales, at 134,000 tonnes, fell well short of expectations of at least 350,000 tonnes, fostering ideas of prices rationing demand.

"Corn export sales were weak. There is no question that higher prices have limited US corn export sales as new crop sales are down 18% compared to the same point a year ago," Country Futures' Darrell Holaday said.

"This is the obvious spot where some rationing has occurred."

September vs December

Still, with exports expected to account for only 12% of use of the US harvest, and concerns over storm damage from Hurricane Isaac to eastern Corn Belt crops, the damage was limited.

Indeed, Mr Holaday also noted a supportive point to the corn complex in the relatively firm performance of the September contract, which closed up 0.3% at \$8.11 ½ a bushel even though it is approaching expiry, when investors risk physical exposure.

"The September contract has moved to a premium to December. This indicates that commercials are long the September and are more than willing to take delivery – a bullish signal."

'Uncomfortable shorting'

Among soft commodities, the selling pressure which drove New York October raw sugar contract back below 20 cents a pound in the last session faced two obstacles, the first being questions over the appetite of funds for adding yet more short positions.

"The market chat still seems to be conjecture on the size of the limit of the fund net short," Thomas Kujawa at Sucden Financial said, adding that "we feel uncomfortable shorting around present levels".

The second was a report that sugar production in Maharashtra, India's top producing Maharashtra state, will fall by some 30% year on year to 6.3m tonnes in 2012-13, thanks to the impact of a poor start to the monsoon on cane yields.

The comments, from the state Sugar Commissioner's office, countered some of the ideas of a reviving monsoon, which tie in with the idea of a soft El Nino.

However, while late contracts firmed, the October lot dropped 0.01 cents to 19.75 cents a pound, with a reduction to 58, from 71, in the last week in the queue of ships waiting to load sugar in Brazil strengthening bears' elbows.

Coffee drops

As did macroeconomic jitters, ahead of Friday's meeting of central bankers at Jackson Hole, nerves which sent stocks lower and the dollar some 0.2% higher, cutting the appeal of dollar-denominated assets to buyers in other currencies.

Still, there was more than that behind New York arabica coffee's 2.0% drop to 163.40 cents a pound, for December delivery.

Besides increasing stocks for delivery against New York futures, Brazil's Institute of Agricultural Economics estimated the Sao Paulo crop may end up at 5.24m bags for 2011-12, a rise of one-third year on year.

The rise was attributed to better agronomic practices and rains in late 2011 and early 2012, with planted area pretty much unchanged.