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Evening markets: crop futures recover - many closing higher

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The much-anticipated US jobs data were not a panacea for the collapse in investor sentiment.

But they certainly made the exits look less of a necessity for investors, in showing that the world's biggest economy was not a lost cause, creating 117,000 jobs last month, a little more than economists had expected.

Talk that the European Central Bank is prepared to buy up Italian and Spanish bonds, providing support for the latest eurozone economies in the firing line over heavy debts, also helped improve the mood.

While the uptick came too late to prevent further heavy losses in London shares, New York stocks managed gains in late deals.

And West Texas Intermediate

crude

recovered losses of nearly $4 a barrel to get back into positive territory.

Oil was helped in this mission by a tumble of 0.7% in the

dollar

against a basket of currencies, making dollar-denominated assets including many commodities more affordable as exports.

Indeed, the CRB commodities index pulled back most of its losses to end 0.4% lower.

Iced coffee

That cycle of despair followed by recovery was typical of farm commodities too, although

coffee

did the opposite – soaring 5% early on, after frost spread to Minas Gerais - a bigger coffee producing state than Parana, the site of a freeze scare earlier in the week – only to lose most of its gains as talk showed the scare overdone.

New York's September arabica coffee contract closed up 0.9% at 237.15 cents a pound.

Technically, "stochastics and relative strength index analysis show signs of the market being oversold", Jurgens Bauer at PitGuru added, terming "impressive" the bean's strength early on while other markets sagged.

'Indication of

reduced desire'

Soybeans

recovered about half of their losses to end 0.7% lower at $13.36 a bushel, despite concerns over China's recent tendency to roll US orders scheduled for 2010-11 into the next crop year.

"The lack of Chinese interest and their continual movement of old crop purchases to new crop have put a negative spin on the trade," Darrell Holaday at Country Futures said.

"No matter how you look at it, this move by China is an indication of reduced desire for soybeans."

Benson Quinn Commodities added that the US weather outlook "looks favourable for a large percentage of US soybean production", also putting a downer on sentiment.

Weak estimates

Without these headwinds, some grains contracts closed in positive territory.

Corn

for December, for instance, the most-watched contract in Chicago's most-watched crop at the moment, finished up 0.2% at $7.03 a bushel, helped by continued concerns that better weather has come to late to rescue the US crop from heat damage sustained last month.

"Many corn yield [estimates] are coming in lower than expected," Benson Quinn Commodities noted.

"Private production estimates on corn production have come in on either side of 13bn bushels."

On Friday, North America Risk Management Services was among the latest to reveal estimates, ahead of a key US Department of Agriculture report due on Thursday, forecasting the corn yield at 156.0 bushels per acre, 2.7 bushels per acre below the current official figure, if a little above ideas from other brokers.

'Plagued by rain'

Wheat

closed down 0.4% at $6.79 a bushel in Chicago for September delivery, but added 1.2% to $7.80 ¼ a bushel in Kansas, which trades hard red winter wheat.

Minneapolis hard red spring wheat gained 0.5% to $8.27 ½ a bushel for September.

US wheats overall gained some support from an order from Iraq of 100,000 tonnes (on top of 50,000 tonnes from Russia, the exporter to beat at the moment).

However, the higher protein varieties were supported by talk from Canada's agriculture ministry over quality concerns to its crop, and of similar fears for some central European harvests too.

"Germany and much of central Europe have continued to be plagued by rain. There's still rapeseed to be cut and at least half the German wheat crop is still out in the fields and beginning to lose quality," an analyst at the UK grain arm of a major European commodities house said.

In Ukraine, "one report suggested that up to 60% of post-rain wheat was being downgraded to feed", the rains being unbearably heavy in parts of the country.

'Stop-start harvest'

At FC Stone, Jaime Nolan added that Germany had "not fared as well as France this last week, with showers continuing to drive a stop-start harvest".

"With just under 50% of the crop cut, this is the one key bullish factor in our immediate fundamental market here in Europe," he added, noting forecasts for more showers over much of Germany.

However, European contracts closed too early to gain the full benefit of the revived market sentiment, with Paris wheat for November delivery ending down 0.6% at E195.50 a tonne.

London's November lot closed down 1.0% at £159.65 a tonne – which was actually the weakest finish for a spot contract since October, if above some intraday lows reached during the last couple of weeks.

Gallant cotton?

And what of New York

cotton

, whose contrary moves and sharp intraday recoveries have been puzzling analysts of late?

Indeed, Keith Brown, at Georgia-based brokerage Keith Brown & Co, highlighted that he was "impressed" by the fibre's positive close in the last session, when virtually every other commodity dropped.

"We mean, come on, in olden days, cotton would have shoved women and children aside to get to the lifeboats," Mr Brown said.

Sadly, it reverted to form, trampling over mothers and minors to close down 3.2% at 101.58 cents a pound for December delivery. King cotton's old habits die hard.

By Agrimoney.com

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