With many high-profile ag contracts sleeping, thanks to public holidays in the likes of Canada, Malaysia and the US, Chinese-traded rubber and cotton futures grabbed the limelight, reaching multi-month highs.

In Tokyo, February rubber futures soared 4.4% to 227.90 yen a kilogramme, earlier touching 228.90 yen a kilogramme, the highest for a benchmark contract in three months.

The gains came as Tokyo rubber for January surged to 17,410  yuan a tonne, the highest for the contract in nearly five months, before easing back to settle at 17,165 yuan a tonne, a gain of 2.9% on the day.

Economic spur

Shanghai prices had been on a gentle rise since Beijing last week revealed an anti-dumping probe into some rubber imports from the EU, US and Singapore which, the commerce ministry claimed, have been selling hydrogenated butyl rubber at a discount to appropriate prices.

This, the ministry said, hurts margins and sales prices for China's domestic industry.

But the rally shifted up an extra gear after the Caixin/Markit Manufacturing Purchasing Managers' Index on Friday showed that China's manufacturing activity expanded at the fastest pace in six months in August.

With China the top importer and consumer of rubber, that bodes well for demand for the tyre ingredient.

Shanghai warehouse rubber inventories had actually been building a touch, by 1.7% week on week to 7,050 tonnes, according to exchange data on Friday.

Trading house ban

Also on the rise in China were prices of Zhengzhou cotton futures, which settled up 2.5% at 15,700 yuan a tonne, a three-month closing high, after earlier touching 15,975 yuan a tonne.

Again, futures had been trading upwards a touch later last week, lifted by strong prices in the US, where values have been lifted by concerns over crop damage from Hurricane Harvey, and continued strong export sales data.

However, gains accelerated on Monday after China said that it would ban trading firms from buying cotton from state reserves for this month, so allowing cotton spinners a free hand at purchases from the daily auctions of the state's (huge) stocks.

But the move will force other buyers elsewhere, such as to the futures market.

Strong demand

These auctions have been going well, with 27,200 tonnes sold on Friday, for instance, equivalent to 96% of the 28,200 tonnes offered - indeed, the strong PMI data will hardly have hurt the cotton market either.

And that was the first time that less than 100% of cotton offered had been sold since August 24, when 28,600 tonnes went, equivalent to 97% of the 29,600 tonnes available.

Indeed, China, which began this year's auctions in early March, had intended to end the programme last month, before the strong demand persuaded it to keep the events going for September too.

However, there have been concerns that the strength of the buying is down to traders, hoping to sell on at a profit.

(Purchase prices at the auction, averaging 14,378 tonnes on Friday, for instance, are well below those on the futures market.)

Corn gains

On the Dalian exchange, Chinese corn added 0.8% to 1,706 yuan a tonne for January delivery, helped by the late-week strength in Chicago, but also by improved results from China's auction of corn from state reserves.

On Friday, the 58% of corn on offer found buyers (comprising 76% of 2014 supplies, and 19.2% of 2013 crop).

That compares with figures of 43% of 2014 corn, and 6.2% for 2013 crop, on Thursday, and was above week-before data too.

Palm up

Dalian palm oil futures for January added 0.4% to 5,534 a tonne, with trade muted by the lack of input from the Kuala Lumpur market, which remains closed for a Malaysian national holiday.

A survey from Reuters overnight showed that Indonesian output was expected to have risen to 3.5m tonnes in July, from 3.2m tonnes in June.

Exports were pegged at 2.4m tonnes, up some 200,000 tonnes or so month on month.

Still, higher production, and export availability, would be expected from the top palm oil-producing nation amid a seasonal rise in output.