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Evening markets: soy takes lead, as harvest presses on corn

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In the end, it was the agricultural commodities market's longer-term higher fliers which tended to feel the pull of gravity more on Monday.

In Chicago, for instance, there were still bullish noises about


, which closed the last session at a two-month top.

"Anecdotal evidence we received from farmers north west of Fargo [in North Dakota] indicated their yield and quality expectations had slipped considerably as the season has progressed," Rabobank said, talking of spring wheat, as it lifted hopes for grain futures prices.

But investors could not resist a round of profit-taking, to send Chicago wheat for September 0.7% lower to $7.57 ¼ a bushel, and Minneapolis spring wheat down 0.8% to $9.48 ¼ a bushel.

'Very legitimate problem'

It took expectations of more dry weather in the southern Plain to help Kansas hard red winter wheat avoid a similar fate, and end up 0.9% at $8.74 a bushel instead.

"Markets now have to deal with the very legitimate problem of not planting an hard red winter wheat crop in major areas of Texas, Oklahoma and Kansas," Matthew Pierce at PitGuru said.

"The drought monitor paints a disastrous picture for producers in those areas."

'How far below 150?'

The cue for harder headway was not external markets, which enjoyed an upbeat day, with Wall Street


, and New York


, up 2% in late deals, and the


easing a touch as demand for safe havens waned.

It was more the fallback in corn from a contract high despite what appeared to be a bullish report from the ProFarmer tour, pitching the US corn yield 147.9 bushels per acre, below the US Department of Agriculture estimate of 153.0 bushels per acre.

"The debate no longer it whether or not the US corn yield is below 150. The debate is how far below 150 the yield will be," Darrell Holaday at Country Futures said.

Had 147.9 bushels per acre already been factored in?

"Trade has been talking possible 147-to-148 bushels per acre yield," Benson Quinn Commodities said.

'Not make highs in August'

That might have been part of the story.

But there is also increasing chatter about pressure from increased US supplies as the harvest progresses.

"There will be corn moving into inventories starting next week as harvest begins to pick up some momentum," Mr Holaday said.

PitGuru's Mr Pierce said: "Feeders are taking a bath and exporters are seeing demand dry up. At what point will ethanol producers run out of corn with the input at $8.00 a bushel and crude at only $85.00 a barrel?

"This will likely tank basis on the rally into harvest with even a small crop sure to put the brakes on this rally. This is why the market does not make highs in August."

'Missed rains'

December corn, having hit a contract high of $7.79 a bushel in overnight deals, ended at $7.70 ad bushel, up 0.4%.

That left the day open to


, having escaped on Friday from a trading range which had incarcerated them for all of 2011, to take the podium.

And they did, despite a relatively downbeat ProFarmer tour result, which pitched the US yield at 41.8 bushels per acre, 0.4 bushels per acre above the USDA estimate.

Benson Quinn cited "missed rains across key central Midwest soybean areas" for the oilseed's popularity, besides a weather forecast that "is mostly dry for the next week".

Soybeans are still in a vulnerable period, unlike corn, whose most vulnerable moments have passed.

Chicago's November soybean lot added 2.1% to $14.47 a bushel, the contract's highest close for three years.

Cotton strung along

In New York too, raw


, a strong performer of late, found the going tougher, falling 1.1% to 29.89 cents a pound for October delivery, dropping back below the psychologically important 30-cents-a-pound mark.

The decline was attributed largely to technical factors, with speculators, who already have a large net long position in the sweetener, seen nervous of adding more – and, indeed, of being beaten to taking profits should a correction emerge.



, which has struggled, added 0.6% to 104.92 cents a pound for December delivery.

"Higher outside markets are attracting attention, particularly those of competing row crops where new life-of-contract highs come with each uptick," Mike Stevens, the veteran cotton trader, said, also noting a small rise in futures in China, the top producer, importer and consumer of the fibre.


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