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Evening markets: grain prices stumble. Sugar prices slump

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To lose one price support is unfortunate, but to lose two looks careless.

Sugar

investors, anyway, didn't take kindly to the idea not only that the bottom in the Brazil (Center South) production forecasts may have been reached – Canaplan lifted its estimate, the first upgrade for eons – but that Chinese demand may not be so firm too.

China's latest auction of sugar from state stocks came up with some surprisingly weak prices, Agrimoney.com was told, with some apparently going for 5,500 yuan a tonne. (November futures had closed on the Zhengzhou exchange up 1.1%, at 7.225 yuan a tonne.)

Given the stress that investors have placed on the idea of weaker-than-expected output from Brazil the top producer, and soaring demand from China, the results were not pretty.

Especially with the European Union closing the door on further imports quotas at discounted duty rates too.

Back below $700

Sugar for October slumped 6.7% to a one-month closing low of 27.52 cents a pound. It was the worst fall for a spot contract for six months.

The better-traded December lot shed 6.6% to 26.31 cents a pound.

London trading closed early enough to spare white sugar the worst of the sell-off, with the December lot, in its first day as the spot contract, closing down 4.3% at $687.20 a tonne.

It was, nonetheless, the lowest finish for a spot contract since early June, and indeed the first below $700 a tonne since then too.

'Demand erosion'

Indeed, if grain bulls thought they were badly off…

Chicago

corn

and

wheat

future suffered another negative session (wheat has risen only on two trading days this month), in part thanks to an overnight frost proving mild enough to spare US crops significant damage.

"US crop now looks safe from a freeze for the next 14 days. That should about do it from a freeze scare," US Commodities said.

Meanwhile, with wheat export weak and US corn ethanol production lower, "the tone remains negative as the trade focuses on demand erosion", Benson Quinn Commodities said.

Dry and getting drier

OK, there are growing weather concerns in South America too, as corn sowings begin.

"The central and southern regions in Argentina looking dry with no break seen," GrainAnalyst trader Matthew Pierce said.

"Cordoba and Santa Fe [states] are trying to plant corn but it's not going well so far."

However, while "Argentina deserves watching and may be the next bullish catalyst, it is still too early to get fired up about that", he added.

Nor was he impressed by the US Department of Agriculture Farm Service Agency data on insurance claims, closely watched for indications of whether harvested acres will disappoint, terming the statistics "bearish".

Not all observers agreed, with Benson Quinn terming the numbers "a little supportive as they suggest a possibility of 800,000-1m fewer acres of corn, possibly 400,000 fewer acres of soybeans and potentially 1m fewer acres in the generic wheat category".

US Commodities said: "The report gave no indication that in the October [USDA US crop production] report corn harvested acres will not be reduced 400,000-600,000 acres on corn, soybeans 50,000-100,000 acres and spring wheat acres cut 200,000-400,000 acres."

Another report…

Whatever, the data were not enough to support prices, especially when some more USDA data are looming large – and have a history of negative surprises.

A report on US crop stocks, due on September 30, "looms large", US Commodities said.

"Remember last year the government found a lot of bushels of corn in this report."

December corn dropped 1.3% to $6.92 a bushel, ending below $7 a bushel for the first time in a month.

Chicago wheat for December lot shed 1.1% to finish at a one-month low of $6.88 ¼ a bushel, at least closing its atypical discount by a further 1.25 cents.

Oilseeds slip, a little

Soybeans

dropped too, but not by so much, closing down 0.2% at $13.55 ½ a bushel for November delivery, albeit the lowest for nearly a month too, amid a resilient performance generally by oilseeds.

Indeed, there was some thought that here prices may have gone low enough to summon up demand.

Winnipeg

canola

closed its losing streak, ending down 0.1% at Can$551.00 a tonne, and Paris

rapeseed

closed up 0.7% at E442.00 a tonne for November, helped in part by a weakening again in the euro.

Indeed, rapeseed did better than European wheat, which closed up 0.1% at E197.00 a tonne in Paris, and up 0.3% at £161.75 a tonne in London.

By Agrimoney.com

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