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Evening markets; bulls bank on new month fund rush

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The exit of Dubai fears (for now at least) allowed bulls centre stage in crop markets, encouraged by expectations that the start of a new month will bring a fresh inflow of cash into commodity markets.

The dollar stabilised well below Friday's stronghold, standing at $1.50 against the euro at 20:00 GMT, as waning concerns over Dubai's debt crisis encouraged investors from a currency which has acted as a citadel in difficult times.

A weak dollar makes US exports such as crops more competitive on export markets.

Oil did its bit for the sources of biofuels too by rising 1.5% to $77.22 a barrel, with Wall Street equities, if not jubilant, at least trading only marginally lower.

History to repeat?

With external markets playing ball, investors took the chance to snap up crops – wheat, at least - expected to get a further boost when Tuesday ushers in December.

"Part of the reason for late session gains is the expectation, rightly or wrongly, that large scale, aggressive fund buying will start tomorrow with the beginning of the new month," Vic Lespinasse at GrainAnalyst.com, said.

"That is what happened the first two trading days of November and this is what the bulls think (or hope) will happen the first couple of days in December."

Wheat, the Chicago crop which appears the most affected by fund buying, which many believe has divorced prices from the reality of rich global stocks, was the biggest gainer, leaping 3.4% to $5.67 ½ a bushel for December delivery and 3.0% to $5.88 ¾ a bushel for March.

Investors grasping for supportive fundamentals might have settled on the strike at Canada National Rail which the Canadian Wheat Board has termed a "very serious situation, especially ifit goes on for any length of time".

'Borrowed time'

Corn, after a reluctant start, was dragged higher to close up 1.4% at $4.02 ¾ a bushel for December, with the March contract ending up 1.0% at $4.17 ½ a bushel.

Soybeans were the weakest pit in percentage terms, adding 7.5 cents to $10.60 ½ a bushel for January.

This may have been a disappointment to some investors, given a strong performance in Chinese soybeans overnight, adding 2% on the Dalian exchange to a year high, apparently fuelled by fund buying.

However, it faced some headwinds, including a bearish Rabobank report, which warned of the threat of rising South American production, tallying with thinking from many other observers.

US Commodities noted rains in Argentina over the weekend, which had improved prospects for the crop in the world's third-biggest soybean producer.

"Argentina could now produce a 53m-54m tonne soybean crop versus 32m tonnes a year ago," the Iowa-based broker said.

"It appears world soybean values are living on borrowed time."

By Agrimoney.com

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