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Evening markets: corn, wheat set new 2009 lows

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Favourable US weather, Chinese soybean sales, Egyptians preferring Russian wheat – it was little surprise that American and European crop prices lost ground on Tuesday given the headwinds they faced.

And that was even before comments from Ben Bernanke, the head of the Federal Reserve, dented sentiment in financial markets by saying that unemployment was likely to remain high into 2011, hindering a revival in consumer confidence.

The comments cost shares and oil early gains, and revived the dollar which strengthened against the euro to a little under $1.42, bouncing from a six-week low.

A strong greenback was another reason for investors in Chicago farm commodities to sell, making dollar-denominated assets more costly to foreign buyers.

Cairo factor

Indeed, Egypt, a big grain importer, may have needed little persuasion to opt for Russian over US wheat in tenders for 60,000 tonnes.

Vic Lespinasse, analyst at, said: "Egypt paid $178 a tonne versus the cheapest US offer of $189 a tonne. Freight cost $20 a tonne from Russia versus at least $41 a tonne from the US."

Even considering that Russian wheat is often cheaper for a reason – lower quality – that is a tempting discount.

Chicago wheat for September slumped 8.25 cents, or 1.6%, to $5.33 ½ a bushel at 17:30 GMT.

European contracts were hurt too. In France – where Egypt had been sourcing much of its wheat – Paris's August contract dropped E1.25 a tonne to E135.75 a tonne.

London wheat slid £1.50 to £109.75 a tonne, a 2009 low for the contract, and 18% below its most recent peak at the start of June.

Corn slips

Still, Chicago corn investors will have little sympathy, with the September contract shedding 11.5 cents, or 3.6%, to $3.11 ¾ a bushel, and hitting a fresh 2009 low of 3.10 ½ a bushel earlier.

At this low, near-term corn had plunged 31% from a June 2 high. A couple more days like this and, once the crop slipped below a $2.90 a bushel, it would be retracing territory not seen since October 2006.

The crop's price has been particularly hurt by a period of benign weather in the US, coming as it does within the crucial pollination period, promising high yields.

And the 71% of US corn rated good or excellent in Monday's US Department of Agriculture report was the highest since 2004 at this time of year.

Beans slip

Indeed, many observers are forecasting high corn yields in the US, with a report from University of Illinois economist Darrel Good saying that production could come in 762m bushels higher than current USDA forecasts.

Soybeans, meanwhile, slid 25.75 cents, or 2.5%, to $10.07 a bushel for August delivery, wiping out much of the rebound in the last couple of days.

Good weather and crop condition is again partly to blame, although the prospect of the sell down of some Chinese stocks on Thursday has also unnerved some investors.

Cocoa bucks the trend

Softs did not suffer quite the travails of grains, with cocoa continuing its march higher - at least in London, where the September contract added £16 to £1,824 a tonne.

The strong dollar held back New York cocoa somewhat, with the September lot down $4 at $2,684 a tonne.

Still, headway was not easy to come by, with London coffee and sugar closing lower.

And New York orange juice felt the weight of profit-taking, dropping 1.5%, although remaining 2.2 cents above the $1 a pound mark.

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