The boisterous rally which ended last week gave way to something altogether more cautious to start this one.
Both of the major drivers – US weather, and a China-US trade deal - to the gains last time attracted a bit a more caution on Monday, as investors awaited further details.
On China-US accord, while President Donald Trump talked of a “substantial phase one deal” having been ironed out, potentially for agreement next month, there appears scope yet for the rapprochement to founder.
Details of what has been agreed appear sketchy.
Economists from Citi termed a Chinese statement on the agreement “cautious and subdued”, also flagging that it failed to mentioning a plan to purchase US agricultural commodities.
“The implementation on this partial deal can’t be verified based on published documents,” the bank said.
“Thus, implementation will be at the mercy of goodwill from both sides.”
‘Caused some damage’
As for the US weather, and its winter storm, “weekend precipitation was near expectations, with rain and snow (mostly rain) favouring eastern South Dakota, central Minnesota, eastern Missouri, Illinois, Wisconsin, Indiana, Michigan, and Ohio,” Maxar said.
In the Midwest, “weekend cold temperatures and snow in north western areas resulted in some damage to immature corn and soybeans”.
In the Plains, “weekend cold temperatures in eastern Colorado, Nebraska, and far western Kansas caused some damage to red winter wheat that has emerged,” the weather service said, adding that more moisture is on the way into this weekend.
“The precipitation outlook is wetter in the central Plains and Midwest,” a factor what will “maintain wetness concerns for corn and soybean” and “slow remaining winter wheat planting”.
Maxar added that “the temperature outlook is warmer across the Midwest, and Delta but cooler in the Western Plains”.
Benson Quinn Commodities flagged comments from North Dakota representative, and farmer, Jon Nelson that crop losses in the state from the weather are expected to be "massive".
“Any wheat that was unharvested ‘will probably be a total loss’, he said,” with 10% of North Dakota spring wheat still in the field as of Sunday 6.
Tobin Gorey at Commonwealth Bank of Australia said that “weather watchers seem to think weekend cold and freezes were perhaps worse than forecast” in North America, with Canada also feeling winter, with eg up to 30 inches of snow reported in parts of Manitoba.
“The temperatures are low enough to do significant damage to immature crops so yields and realisations will fall,” Mr Gorey said.
’By how much?’
However, as he added, “the question is ’by how much?’
“Few will doubt there has been material crop damage. The market’s focus will turn to guesstimating how much corn will be lost.”
Agritel said that while weekend conditions in the Dakotas Minnesota and Iowa “raised concerns” and have “probably stopped the final vegetative development of late corn crops”, it was “too early to assess possible damage”.
While shares added 1.2% in Shanghai, and 0.8% in Hong Kong, while the renminbi, which has tended to move in sync with China-US trade relations, strengthened a further 0.3% against the dollar, ag investors didn’t stick their necks out too much in early trading, compared with their enthusiasm in the last session.
Chicago corn futures for December rose by 0.4% to $3.99 ¼ a bushel as of 09:15 UK time (03:15 Chicago time), faltering at the key $4.00-a-bushel mark, and the 200-day moving average not far above it.
Still, there could be some positive demand news on the grain, at last, to take account of too, with Karl Setzer at Agrivisor saying that “we are now seeing some ethanol plants consider a resumption of processing, indicating that number could rebound in future reports”.
Soybeans, as a crop particularly exposed to China-US trade, and potentially more vulnerable to US cold weather too, added 0.5% to $9.40 ½ a bushel for November.
Still, it was wheat which fared best, amid those ideas of weekend cold having potentially hurt winter wheat seedlings, and with plantings expected to slow.
Chicago soft red winter wheat gained 0.9% to $5.12 ½ a bushel for December, and Kansas City hard red winter wheat for December added 1.4% to $4.25 ¼ a bushel, a two-month high.
‘Run for the hills’
In New York, cotton, another ag very much involved in US-China trade in more normal times, added 0.6% to 64.26 cents a pound for December, extending its lead above its 100-day moving average regained in the last session.
“A couple of days closing above the 100-day and the short speculator will start to run for the hills and potentially might even go long,” said Ron Lee at McCleskey Cotton.
“While there is a huge amount of farmer selling to do, this could run the market further than one would originally think.”
That said, the December contract remained well below a high of 65.85 cents a pound hit earlier.