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Evening markets: Jack Frost saves grains from Juergen Stark

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Jack Frost protected grain markets from Juergen Stark.

Mr Stark, a member of the European Central Bank Board, raised his profile, and a dose of investor panic, by resigning, apparently in frustration at the bank's policy over buying up debts from peripheral eurozone nations.

With reports of Germany preparing plans to shore up its banks, should debt-laden Greece default, the scene was set for classic risk aversion trading.

Wall Street

shares

fell 2.8% in lunchtime deals, in line with New York

crude

, which dropped back below $87 a barrel.

The

dollar

, as a prized safe haven, gained more than 1%. You know the drill.

'Could have a hard freeze'

But (most) agricultural commodities resisted the liquidation, and not just because of the US Department of Agriculture's benchmark Wasde report on Monday, which has got investors cautious over just how much the official estimate for the US corn crop will be cut.

The prospect of a visit by Mr Frost, the mythical purveyor of cold temperatures, to large parts of the Corn Belt may not matter a jot to share investors. (It could be argued as helpful to energy prices.)

But it caused enough chatter in Chicago to give investors in corn and soybeans another reason to hang on.

US Commodities said: "Both the American and European maps have a frost; we could even have a hard freeze. The areas of concern are Minnesota, Wisconsin, and north east Iowa.

"The odds are now about 25% that a hard freeze will occur."

La Nina…

Even David Tolleris at WxRisk.com, who had been a freeze sceptic, conceded ground.

Models showed a "significant cold air outbreak developing for the upper Plains and a good portion of the northern Midwest and the time frame of September 14, 15 and 16," he said.

"The confidence that there is going to be a significant early season frost over large portions of Minnesota, Wisconsin, Iowa, Michigan and the northern third of Illinois, Indiana and Ohio as well as much of New England is increasing."

Besides, such early frosts are often linked with La Nina, over which fears are increasing, after the US Climate Prediction Center on Thursday forecast that "while it is not yet clear what the ultimate strength of this La Nina will be, La Nina conditions have returned and are expected to gradually strengthen and continue into the northern hemisphere winter 2011-12".

US vs South America

Factor in export sales deemed "generally supportive" by Darrell Holaday at Country Futures and the scene was set for a firmer day on grain markets than elsewhere - even in soybeans, which suffered a cancellation of a 240,000-tonne sale to China (offset in part by 127,500-tonne order by unknown).

The cancellation was "due to ample and cheap Brazilian and Argentine supplies", Benson Quinn Commodities said, nothing higher than usual stocks left over in South America.

"China typically buys all October-to-December needs for US with Brazil and Argentina usually sold out of export supplies by now and fresh new crop supplies from US cheaper."

Corn for December stood 0.3% higher at $7.36 ¼ a bushel for December delivery, with 45 minutes of trading in Chicago to go.

Soybeans for November were 0.2% up at $14.21 ½ a bushel.

'Looks grim'

The laggard was wheat, despite weekly export sales of 512,000 tonnes, marginally ahead of market estimates, and thoughts that the grain might gain against corn, which is under more harvest pressure, and with dry weather still dogging hard red winter wheat areas preparing for planting.

"Planting for hard red winter wheat looks grim," Matthew Pierce at PitGuru said.

"This will help Kansas [where hard red winter wheat is traded] carry the weight of the entire wheat market heading into the planting season over the next 45 days."

But not on Friday, when the grain suffered from the broader market malaise.

Kansas wheat for December fell 0.8% to $8.39 ½ a bushel, with Chicago's December contract down 0.8% at $7.31 ½ a bushel.

Minneapolis spring wheat, much of it still in the field, did better, adding 0.1% to $9.09 a bushel for December.

By Agrimoney.com

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