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|Evening markets: ags fade as joy over \$42bn China move wanes
By Agrimoney.com - Published 09/10/2012
What does it take to impress investors these days?
China's injection of 265bn remninbi (\$42bn) into its monetary system might have been expected to bring some semblance of joy to markets, showing the determination of the world's second-largest economy to maintain a grip on growth.
But joy turned to fears over what was provoking such a move after the International Monetary Fund cut its forecast for world economic growth for the second time since April, flagging in particular challenges to Europe and the US.
Shares closed lower in Europe, and traded down 0.6% on Wall Street in late deals.
The safe haven of the dollar, meanwhile, added 0.6%.
'Lack of follow through buying'
And while Brent crude did gain more than 2%, climbing back over \$114 a barrel, and helping the CRB index added nearly 1%, that was put down to tensions between Turkey and Syria rather than China's move.
Signally, copper, often viewed as an indicator of sentiment on China given the country's huge appetite for the metal, closed a touch lower in London.
It needed something special to rise above the fray, which many farm commodities turned out not to have.
The sell-off in many Chicago crops from earlier gains "was primarily the result of the lack of follow through buying at the higher levels", Darrell Holaday at Country Futures.
'Reached that equilibrium'
Which for the likes of corn and soybeans was perhaps not so surprising given the prospect on Thursday of a key US Department of Agriculture Wasde crop report, which will give fresh production estimates for the row crops.
"We seem to have reached that equilibrium area ahead of the report. No strong conviction on either side," Mr Holaday said.
That trumped the price-positive trend of the US harvest of both crops getting into its latter stages, with USDA data later (delayed from Monday by the Columbus Day holiday) expected to show the corn harvest 70% complete, and nearly as high a proportion of soybeans in the barn.
"The slowing movement of soybeans into the cash markets with harvest seen over 60% complete and technical factors are offering support to price," Benson Quinn Commodities said.
'Fresh China import interest'
For soybeans, there was "talk of fresh China import interest", Benson Quinn said, also noting "firmer soymeal basis values due to increased meal export demand".
However, the broker also flagged the dearth of US soybean exports released under the USDA;s daily alerts system, even if soybean shipments as released through cargo inspections were firm, at 45.6m bushels, ahead of the 41.8m bushels a week before, and twice those of a year before.
"This has soybeans leaking back from morning highs."
And while Oil World reassured bulls on the squeeze on US soybean supplies, saying stocks would fall drastically even with an upgrade to the US harvest, Conab came up with upbeat forecasts for the Brazilian crop.
The November contract closed down 0.2% at \$15.50 a bushel. December soymeal closed down 0.3% at \$471.00 a short ton.
'Firm cash corn'
Corn dropped too, albeit by a more modest 0.1% to \$7.42 a bushel for December delivery, given some support by US cash prices.
"Debate continues on whether firm cash corn is being prompted by use exceeding permissible off-take levels, or because of tight farmer holding," Richard Feltes at RJ O'Brien said.
"Either way, the corn pipeline is not getting enough corn, suggesting firming spreads into year end."
In fact that didn't work on Tuesday, with the March contract edging 0.25 cents higher to \$7.42 ¼ a bushel to gain the smallest premium over the December lot.
'Concern is developing'
Again, it was left to wheat to fly the flag for bulls (although Chicago watchers might like to note a 2.0% jump to \$3.78 a bushel in oats, often considered a leading indicator).
"The GFS weather model continues to point to questionable rainfall in the Plains this weekend and that is pushing wheat values higher again," Country Futures' Mr Holaday said.
Indeed, US Commodities highlighted that "a concern is developing" over the weakness of the switch in to an El Nino weather pattern, which had boded well for many crops.
"The drought in the US is continuing," just as wheat growers are attempting to sow winter crop.
"The US weather is expected to be wetter in the Ohio Valley, but more acres will be drier versus wetter going into the winter."
Wheat added 0.4% to \$8.64 ¼ a bushel in Chicago for December delivery, while gaining 0.6% to E261.50 a tonne in Paris for November, and edging 0.1% higher to £201.75 a tonne in London, also for November.
Cocoa question mark
Many soft commodities struggled for headway too, with data from Unica showing a sharp slowdown in Brazil Centre South sugar production providing on temporary support to prices.
New York's March raw sugar lot closed up 0.2% at 21.47 cents a pound.
But cocoa did better, amid talk that a dearth of sunlight in Nigeria may delay the 2012-13 harvest, raising a further question mark over the industry in the country, which saw its 2011-12 crop downgraded last month by the Cocoa Association of Nigeria by 300,000 tonnes to 250,000 tonnes, with disease pressures weighing too.
London cocoa for December added 1.6% to £1,562 a tonne, with its New York peer gaining 1.5% to \$2,417 a tonne.
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