For the first time this year, crops started the week on the back foot – even New York raw
In fact, risk assets in general weakened in early deals, sapped not just by Friday's weaker-than-expected US economic growth data for the fourth quarter of 2011, but also by lingering eurozone debt concerns.
Monday brings the first meeting this year of European Union leaders looking at the debt crisis, and expected to agree a permanent rescue fund for the eurozone, and on rules over balancing national budgets.
Furthermore, news is expected on Greek talks with creditors over a debt swap agreement viewed as vital to avoiding a disorderly default.
The result was a risk-off pose, complete with a revival in the
And, for agricultural commodities, the calendar was seen as providing an extra hurdle in the close-of-the-month, periods seen as often fostering softness as funds tidy up books and potentially raise cash.
"The two days until the end of the month could bring in some additional consolidation," broker Benson Quinn Commodities said.
Sure, what the calendar also brought was the return of China, a huge buyer of commodities including rubber and soybeans, from its new year holiday period.
"China returns to market and with weak dollar and cheap ocean freight, market will be looking for new sales," Benson Quinn said.
"The industry will be closely watching the Chinese sector this week as it returns from its New Year festivities," Luke Mathews at Commonwealth Bank of Australia said, thinking in particular of
In fact, New York cotton was one of the few agricultural commodities to show gains, up 0.4% at 96.00 cents a pound for March, helped by a 0.7% rise to 21,495 yuan a tonne in best-traded May cotton on the Zhengzhou exchange.
For sugar, the Zhengzhou contract was weaker, down 0.3% at 6,520 a tonne for September delivery, providing a weak backdrop for New York raw sugar on its first day of extended trading hours, with opening made two hours earlier at 06:30 GMT – to allow arbitrage with the Zhengzhou.
New York's March lot eased 0.2% to 24.17 cents a pound, if in weak volumes so far.
Chinese contracts for
In Chicago itself, prices could not maintain forward momentum.
Besides the macro-economic environment, corn and soybeans faced extra pressure from the prospect of rains in drought-tested Argentina on Tuesday, even if weather models cannot agree exactly where the precipitation will fall.
"The European model shows more coverage with the rain affecting more of Buenos Aires Santa Fe Cordoba then up into north west Argentina and western Paraguay - 70% coverage of one-to-three inches," weather service WxRisk.com said.
"The model has a concentrated band of four-inch rains covering the northern half of Santa Fe into Chaco."
The GFS model, however, foresees one-inch rains over central Argentina, with "a few small areas of rainfall amounts of two or three inches", WxRisk.com said.
"The GFS model also has an area of four-inch-plus rains but that area of heavy rains is centred over far north west Argentina."
Furthermore, another cold front is expected in the six-to-10-day outlook.
This is good news for farmers, especially growers of
And, indeed, it was soybeans got off to the worst start among Chicago's big three, shedding 1.0% to $12.07 a bushel for March.
Corn dropped 0.7% to $6.37 ¼ a bushel, still feeling more support from South America, besides the strong US cash market.
"Too, most estimates I read, in regards to the Argentina corn crop, are in the 20m-21m tonnes area," Mike Mawdsley at Iowa-based Market 1 said.
"If true, the US Department of Agriculture will have another reason to ratchet up our corn export situation."
On Friday, the Buenos Aires grains exchange estimated the Argentina corn harvest at 22m tonnes, a forecast "down steeply from early expectations from the government of up to 30mi tonnes", Lynette Tan at Phillip Futures noted.
"A fierce winter has hit Russia's southern wheat growing regions, fuelling speculation on a short supply of wheat from the country," Ms Tan said.
From Kiev, Agritel said that "temperatures could slide below -30 degrees Celsius in Central Ukraine this week, and below -20 degrees Celsius in the south where the snow cap is thinner".
"No further snowfalls are forecast in Ukraine" to protect crops against frost, although "in Russia the snow cover should increase, especially in Krasnodar", an important southern grains region.
Russia's official weather service has estimated that temperatures could fall 10-15 degrees Celsius in southern Russia.
As for the extent of the threat, Australia & New Zealand Bank said that the freeze" could damage 15-25% of the Ukraine winter wheat crop where snow cover is inadequate".
In southern Russia, "potential damage is expected to be more isolated, with just 5% of the crop at risk".