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Evening markets: corn holds firm even as US euphoria fades

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The long-awaited tie-up between lawmakers which fostered an outline US debt deal didn't give markets much of a honeymoon.

Poor American manufacturing data saw to that, sending London shares down 0.7% by the close of play, with Wall Street stocks showing similar losses in late deals.

The

dollar

, ironically, revived as investors sought shelter in a so-called safe haven, gaining 0.7% against a basket of currencies and adding extra pressure to commodities by making them more expensive as exports.

West Texas Intermediate

crude

fell back from a day high of $98.60 a barrel back below $95 a barrel, a loss of 0.8% in the session, and New York raw

sugar

lost early gains to close down 2.8% at 28.97 cents a pound for October delivery.

Some fundamental issues added further pressure. "We read the trade are looking past Brazil to India's next crop which perhaps puts a little wind in the bears' sails," Thomas Kujawa at Sucden Financial said.

Technical factors added a note of caution too, with a data showing a rise in speculators' interest in the sweetener at 166,798 lots, the highest since February last year, flagging large potential selling pressure once sugar has fallen out of fashion.

'Another two days of heat'

But

corn

managed a decidedly positive close, ending up 2.4% at $6.81 ¼ a bushel for December delivery, reversing its losses of Friday.

The day of the month was cited as one support, with first trading days often bringing an influx of cash.

But weather maintained an influence too, with investors opting for a bullish interpretation of a mixed weather outlook.

"The Midwest will have another two days of heat and then the weather patter turns cooler and wetter," US Commodities said, heat being the enemy of corn in pollination.

"The current front however does not move as far to the south as projected Friday. This leaves the Mississippi Delta and southern Midwest dry."

At Country Futures, Darrell Holaday said: "The overall strength can primarily be tied to a weather bounce and a bounce off the 'sell everything' attitude that dominated Friday."

"The buying tied to the weather… was primarily the result of very warm temperatures this weekend and the next two days."

'Weather co-operating'

And with corn firm, other Chicago crops had something to rally around, although their gains were more half-hearted, lacking such favour in first-of-the-month buying terms.

OK,

wheat

faces setbacks in Europe, with growing talk of disappointing test weights in France, and rain still dogging the harvest in the centre of the region.

But in the US, the winter wheat harvest "is rolling forward basically at will with weather co-operating", Matthew Pierce at PitGuru said, adding that "yields are increasing dramatically as they move further north" from the southern Plains, which suffered damage from a dry winter and spring.

Furthermore, weekly US export inspections were poor for wheat, at 16.2m bushels, down from 23.7m bushels the previous week.

Chicago (soft red winter) wheat for September closed up 0.6% at $6.76 ½ a bushel, with Kansas hard red winter adding 0.6% to $7.71 ¼ a bushel.

In Europe, Paris wheat for November edged 0.1% lower to E197.50 a tonne, with the London equivalent falling in line to £163.50 a tonne.

'A cause for concern'

Weekly US export inspections were a little less underwhelming for

soybeans

, at 5.8m bushels, compared with 6.0m bushels the week before.

And the oilseed had the support of data showing exports of the oilseed from Brazil, the second-ranked shipper after the US, dipping to 3.7m tonnes in July, down some 18% month on month, and 7% year on year.

However, a continuing deterioration in Chinese manufacturing data sparked concerns among some, with China the top soybean buyer.

The data were "not good and could be a cause for concern, especially in the soybean complex", Mr Holaday said.

Soybeans closed up 0.4% at $13.62 a bushel for Chicago's best-traded November contract.

Speculators to return?

Elsewhere,

cotton

staged another of its remarkable recoveries, rebounding from losses of more than 1% in early deals to close up 3.2% at 105.05 cents a pound for New York's benchmark December lot.

The omens had looked bad, with India, the second-largest cotton exporter, lifting its shipment allowance for the fibre, and meaning that the country could export 1.2m bales up to the end of September.

"This news will no doubt prevent price rises for the time being, and only when the focus is on the disappointing US crop are prices likely to rise once more," Commerzbank analysts said.

But Keith Brown, at Keith Brown & Co, the Georgia-based broker, noted supportive technical factors, with the fibre having a "bullish divergence to work off, which might carry it to the 107 cent- a-pound area".

The 50% retracement, a point beloved by followers of so-called Fibonacci analysis, had also held, at 98.50 cents a pound.

At PitGuru, Jurgens Bauer said that "while demand remains dull, traders are hearing more focus on weather and production expectations which may bring speculators back into the market".

Coffee revives

And

coffee

added 0.8% to 241.35 cents a pound, helped by weak Brazilian exports here too, of 1.8m bags last month, down from 2.2m bags in June, and in July 20101 too.

Furthermore, speculators turned net short on the bean, with their most bearish position in more than two years – showing short-term selling, but signally potential buying pressure ahead.

By Agrimoney.com

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