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Evening markets: bright dollar wilts commodities

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A stronger dollar put paid to food commodities' hopes of ending the week on a high note, sending wheat to its lowest levels for nearly a month.

Data showing eurozone industrial production slumped 22% in the year to April sent the euro back to $1.3925 at one point before staging some recovery to $1.4029, down 0.5% on the day.

That in turn diminished appetite for dollar-denominated commodities, which become more expensive to importers as the dollar strengthens – especially with oil investors in profit-taking mood.

New York crude for July drifted further into negative territory over the day, standing $1.01 lower at $71.67 a barrel at 16:30 GMT, with Brent down $1.18 at $70.61 a barrel.

Chicago goes nowhere

In Chicago, even soybeans – the star of so many recent shows - got hurt, slipping 12.75 cents to $12.54 ½ a bushel for July in afternoon deals.

Old crop soybeans have been boosted by official forecasts that US stocks are on course for a 32-year low.

Indeed, they were still up more than 2% for the week.

The same could not be said for corn, which slipped to $4.26 ¾ a bushel for July delivery, down 3.2% on the day and 3.9% for the week.

Although wheat was performing marginally better on the day, down 2.6% to $5.79 ½ a bushel, this week has given the grain's bulls little cheer, with losses nearing 7%. US predictions for wheat foresee ample global supplies.

Rain factor

Paris wheat was protected somewhat by the weaker euro, dropping a relatively small E1.75 to E141.75 a tonne for August.

No such luck blessed London wheat which, with sterling ploughing ahead, fell £3.85, or 3.4%, to £108.75 a tonne for July. The contract has dropped nearly 11% this week.

Hugh Schryver at Glencore Grain said recent weakness also reflected rain on thirsty crops as far east as Poland.

"With... areas suffering from below average rainfall through May, the market considers that this week's weather has improved the prospects for the EU harvest considerably," Mr Schryver said.

He added: "Whether it has actually arrived in time in some regions is certainly open to doubt."

Nine-day decline

Back across the Pond, softs were in decline again too. Orange juice recorded its ninth successive day of decline, with no sign of deceleration now parched Florida crops have been watered by rain.

New York's July contract lost 2.2% to 82.75 cents a pound, the lowest close since May 1.

September arabica coffee beans closed at their lowest since mid-May, down 1.5% at 131.65 cents a pound.

A report that Costa Rica was on course to raise its coffee harvest by 6.1% to 1.73m bags in 2009-10 did little to improve sentiment.

Even cocoa, which fought dollar strength on Thursday to record a nine-month high, was caught out sliding 1.6% to $2,797 a tonne.

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