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Evening markets: cocoa, orange juice leave grains far behind

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South America weather concerns? Who cares.

Markets, including agricultural commodity ones, had other fish to fry on Tuesday, the biggest being the Chinese trade data which, in showing a tumble in the country's trade surplus, raised hopes of a more balanced economy which would allow authorities to turn to easing monetary policy.

And that would likely encourage imports of raw materials to such a huge consumer of them.

Such thoughts were behind a jump of more than 3% in London

copper

prices, helping the average commodity add 1.3%, as measured by the CRB index.

Thirst for juice

Still, even that was small beer compared with the gains on some soft commodity markets, where New York's January

orange juice

ended (and expired) at a record close for a spot contract of 212.75 cents a pound, up 9.7% on the day.

The better-traded March lot jumped the exchange limit for a second day to end at 207.75 cents a pound, a record for a nearest-but-one contract, taking gains in two days nearly to 17%. (The exchange limit, normally 10 cents a pound, was widened to 20 cents on Tuesday following the last session's limit-up close).

The jump followed concerns that findings of fungicide in Brazilian product would curb US imports from the South American country, the top orange juice producer and exporter, adding to supply fears stoked by forecasts of a freeze in Florida, America's top citrus state.

The US relies on imports for roughly one-quarter of its supplies.

'Deficit might be larger'

And

cocoa

was not too far behind, as ideas waned for West African production, which often booms in a La Nina period, like the current one.

A slowdown in deliveries by farmers of cocoa to Ivory Coast ports "makes it look like they might be more comparable to those in 2009-10 than the bumper level of 2010-11", Rabobank analyst Keith Flury told Agrimoney.com.

Indeed, the ideas of lower delivery add weight to a forecast last month from trading house International that world production would come in 100,000 tonnes short of grindings, with early delivery numbers boosted by carryover stocks from last season, when farmers hoarded during the Ivory Coast's civil war.

"The deficit might be larger than the market has factored in," Mr Flury said.

"Olam's estimate now is looking far more likely to have been realistic."

Prices soar

Cocoa for March spiked 8.1% in London to £1,544 a tonne, taking gains over the last two sessions above 15%.

In New York, March cocoa soared 7.5% to $2,333 a tonne, taking it gains this week above 11%.

The gains were supercharged by short-covering, with speculators in both London and New York and holding net short positions in cocoa as of a week ago, a stance which had been very profitable during a price slide over the last four months of 2011.

The rises helped New York arabica

coffee

add 1.9% to 225.95 cents a pound for March, despite a Brazilian estimate for its domestic 2012-13 crop which, while hardly ebullient, was, at 49m-52.3m tonnes, above some forecasts, and put the country on course for a record.

'Can still recover'

That all made price moves in the big Chicago crops looks positively tame. Which they were, and largely downward.

Part of the issue was much-needed rains in Argentina which, while long expected, is as yet of uncertain volume.

"The cold front that was expected in Brazil and Argentina is moving through and we will have a better feel for the rain totals tomorrow," Darrell Holaday at Country Futures said.

Furthermore, bears could also take some succour from an upgrade by Brazil's Conab crop agency to its estimate for the domestic

soybean

harvest, albeit by a modest 460,000 tonnes to a lowly 71.75m tonnes.

And Oil World issued a reminder that it was not yet too late for Argentina's soybean crop to recover from its dry start.

"The bulk of the soybean crop has not yet entered the reproductive stage and can therefore still recover if rainfall arrives on time," the analysis group said.

'Is this overdone?'

Besides, there are some ideas that crop losses have already been, generously, factored in to prices.

"It is worth noting that the potential fall in the South American corn crop represents less than a per cent of the total world crop, yet the price has moved over 12% up from the December lows. Is this overdone?" traders at a large European commodities house asked.

And there is, anyway, the US Department of Agriculture's monthly Wasde crop report on the horizon, on Thursday, the prospect of which sounded a note caution.

"We have a big set of USDA numbers on Thursday and longs will start looking to lock in gains, especially given the hard time we had last year in making money - and keeping it," Scott Briggs at Australia & New Zealand Bank said.

Ukraine prospects

Corn for March ended unchanged at $6.52 a bushel in Chicago, where soybeans for March eased 1 cent to $12.32 a bushel.

Chicago

wheat

for March ended down 0.3% at $6.39 a bushel.

UkrAgroConsult came in with a Ukraine wheat export figure for 2012-13 which, at 6.3m tonnes, was hardly cheery, down from more than 9m tonnes in 2009-10, was well above some other estimates, which have even talked of the Black Sea country becoming an importer.

By Agrimoney.com

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