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Evening markets: Alcoa and El Nino lift crops

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Alcoa, aided by decent US export data, helped Chicago crops put more distance between themselves and multi-month lows, while El Nino fears sent cocoa soaring.

The aluminium giant blew away many of the clouds surrounding financial markets by announcing a narrower-than-expected quarterly loss and stating that Chinese and US stimulus packages had improved demand for the metal.

The statement helped crops on two levels.

Export boost

The first was direct – news of robust Chinese consumption patterns are viewed as particularly helpful in Chicago, given the country's rich appetite for US (and Brazilian) soybeans.

Indeed, US weekly export sales data showed 1.11m tonnes out of a total of 1.23m tonnes of beans went to China.

September beans, the best traded contract, stood 1.6% higher at $10.31 a bushel at 16:55 GMT, with some further-ahead lots showing 1.9% gains.

Even the soon-to-expire July contract put in a bit of a show, recovering from a two-month low of $10.63 a bushel to $10.92 a bushel, up 8 cents on the day.

Such high volatility, in light trade, continued a trend of recent days, as investors close positions ahead of next week's expiry.

Feelgood factor

The second wave of Alcoa effects were indirect. The group's better-than-expected results improved confidence in all markets, helping shares recover, oil to stop sliding and – importantly – the dollar to give up recent gains.

The greenback lost 0.7% against major currencies, weakening back nearly to $1.40 against the euro. That made dollar denominated commodities look cheaper to buyers paying in other currencies.

Corn added 3.5 cents to $3.28 ¾ a bushel for September, gain mirrored in new crop lots. Corn for delivery this month added 0.75 cents to $3.40 a bushel.

Robust weekly export sales of 1.16m tonnes helped.

Meanwhile, September wheat added 5.75 cents to $5.23 a tonne, in line with 2010 lots. Wheat for this month was 7.75 cents higher at $4.96 ¼ a tonne.

European contracts were also higher, with London wheat for November up £1.25 at £113.25 a tonne, and Paris's August contract E2.50 higher at E136.00 a tonne.

Juice in demand

Among softs, juice and cocoa shared the limelight with rises of more than 4%.

September juice rose stood 4.0 cents higher at 89.00 cents a pound, while New York's September contract added $108 to $2,650 a tonne.

London cocoa, held back by stronger sterling, added 2.3% to £1,700 a tonne.

The rises in cocoa reflected growing fears for an El Nino weather pattern setting in, with potentially gloomy consequences for some cocoa growing countries.

El Nino effect

Ecuador's cocoa plantations, for instance, may suffer an overdose of rain, Fortis warned in a report last week

"We are going into this high-risk period without the comfort of large world stocks," the report added.

"As a consequence, the potential disruption to the cocoa sector should be regarded as very significant,"

However, other softs were not so blessed, with New York coffee for September adding 0.4 cents to 115.60 cents a pound and sugar off 0.9% at 17.05 cents a pound.

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