Grain markets staged something of a turnaround Tuesday, although it was hardly the most convincing in early deals.
Chicago traders say that a strong trend on a Monday is reversed the next day, which should speak of healthy gains this time, given the extent of the declines in the last session.
Then, wheat plunged 4% to a four-year low, while August corn futures dropped temporarily below $4 a bushel, and soybeans fell 2%.
However, compared with those declines, the recovery this Tuesday was small.
Wasde ahead
After all, there is a more negative conclusion to take from Monday's crop price declines.
Iowa-based broker US Commodities noted that "85% of the time in the last 15 years the direction the trade starts Monday after the July 4 weekend is the direction the end of the month".
Which would mean downward.
And there is the matter of the US Department of Agriculture's Wasde crop report to get through too, on Friday, which is expected to be a downbeat one, factoring in higher than expected June 1 grain and soy inventory data, and above-forecast soybean sowings, released last week.
'No signs of bottoming'
That said, will the Wasde provoke some reluctance to extend losses too far, for fear of a data surprise?
"The market is showing no signs of bottoming, although we should find some stability coming into Friday's report, which will be bearish," said Sterling Smith at Citigroup.
"The only question is how bearish will it be and what level will be at when it comes out."
In fact, not all USDA data are going quite so much against crop bulls, with the US crop condition data released overnight showing that corn and soybean condition had not improved, as investors had expected.
Soybeans remained at 72% rated "good" or "excellent", and corn at 75% good or excellent � albeit that these ratings are, of course, historically high.
Mind the gap
And, technically, "the market is oversold", CHS Hedging said, adding that it "could find some support on short covering".
Still, thinking of corn, "the top of the gap left from Monday morning's open would be the first level of minor resistance".
The December corn contract traded on Monday well below the range in the previous session, leaving a chart gap, a factor which gets technical investors excited, and with September corn and the main soybeans contracts in the same boat too.
While December corn made some move upwards move in early deals, adding 0.1% to $4.06 � a bushel as of 09:50 UK time (03:50 Chicago time), it in fact came nowhere near moving into the chart gap, from $4.10 � a bushel to $4.14 � a bushel.
September corn was 0.25 cents higher at $4.00 � a bushel, getting nowhere near its gap from $4.06 to $4.08 � a bushel.
Big yield hopes
The trouble for bulls is that the US weather outlook remains unusually benign
"US farmers, grown accustomed to sub-160 bushels per acre US corn yields in eight of the last 10 years, are unexpectedly faced with the prospect of a 170 bushels-per- acre 2014 US corn yield," Richard Feltes at broker RJ O'Brien said.
And this "along with normal harvest dates, an adequate old crop carryout and large 2014 grain crops globally".
CHS Hedging said: "Ideal growing conditions continue to pressure prices."
Double crop dilemma
For soybeans, there still remains some safety valve for prices, in terms of double crop � the soybeans planted on fields cleared by the winter wheat harvest.
"Whether farmers still plant second crop soybeans following the recent price decline is uncertain," Jefferies Bache said.
However, "the acreage will be available", after drier weather allowed the winter wheat harvest to progress.
That said, at 57% complete as of Sunday, it is three points behind the average, overnight USDA data showed.
Chinese price signals
New crop soybeans for November eased, if by a modest 0.2% to $11.22 � a bushel, with the old crop August contract shedding 0.4% to $12.68 � a bushel.
They were offered some support by a 1.3% rise to 4,367 yuan a tonne in the price of January soybean futures on the Dalian exchange in China, the top soybean importing country.
Today's weekly Chinese auction from state reserves showed 95,566 tonnes, or 30.0%, of soybeans on offer sold, in line with last week's event,]
The average price, at 4,080 yuan a tonne, was 12 yuan a tonne higher.
'Vomitoxin and damage are minimal'
As for wheat, it managed the best bounce in Chicago, adding 0.4% to $5.59 a bushel for September delivery, although this of course recouped only a small part of the losses of the last session.
It was helped somewhat by the US harvest pace remaining behind the average.
That said, fears over quality are receding with the retreat of harvest-time rains,
"Reports from the soft red winter wheat areas that are well into harvest are that vomitoxin and damage are minimal, and that yields and test weights are coming in strong," CHS Hedging said.
For hard red winter wheat, as grown further south, "basis levels were 10-20 cents a bushel weaker as harvest progresses".
At Benson Quinn Commodities, Brian Henry said: "There isn't much to get excited about.
"Longer term wheat needs to find value. Near term, it is maybe a touch oversold."
Cotton revives
Among New York soft commodities, cotton managed a bounce too, adding 0.4% to 70.49 cents a pound for December delivery, despite some bearish US crop progress data overnight.
This showed the proportion of US cotton rated "good" or "excellent" rising by 2 points to 55%.
Still, as Citigroup's Sterling Smith noted, "global supplies of the fibre are inflated globally and Chinese imports are seen slowing which only adds to the worries of this fundamentally unsound market".
