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Evening markets: crops beat nerves to extend rally

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Crops suffered a modest late setback on Thursday, amid nerves ahead of a key US report, but not enough to cost them their clean sweep of positive closes this week.

European wheats closed at their highest since August, with Chicago corn ending at a three-month high.

Again the weather and the dollar helped. The greenback was supportive by turning weaker again – falling to a 14-month low against major currencies – making US exports, including crops, more competitive.

Investors dumped the dollar as better-than-expected US jobs data and strong results from Alcoa raised expectations for the economic recovery.

'Likely inflationary environment'

As for the weather, the prospect of a frost and snow in parts of the US Midwest this weekend maintained thoughts of damage to backward corn crops.

This time oil chipped in too, helped by the economic optimism to add 2.8% to $71.53 a barrel by 06:30 GMT.

Expensive oil buoys crops such as corn, and wheat, used as alternative fuel sources.

Meanwhile, sentiment among crop investors continues to improve, in part because of the feeling that the bear market has taken its fill, and in part because of changing economic times.

"Funds are buying commodities in [expectation of] a likely inflationary environment in the coming months," Paris-based consultancy Agritel said.

All this helped the market overcome nerves ahead of the monthly US Department of Agriculture crops report due on Friday.

Wheat recovery

In Chicago, wheat for December closed up 2.1% at $4.73 a bushel, off a day high of $4.83 a bushel, with its Kansas equivalent ending 2.0% higher at $4.89 ½ a bushel.

It had the additional boost of good weekly US export sales too, at 767,000 tonnes.

Its European equivalents made ground too, notably Paris wheat for November, which broke through a technical resistance level at E126.00 a tonne to close up E1.25 at E127.00 a tonne, helped by reports of a potential downgrade to the French harvest.

That was its highest close since the end of August.

London feed wheat for November managed the same feat by finishing up £0.85 at £101.00 a tonne.

Palm low

Back in Chicago, corn extended its rally, closing up 4 cents at $3.63 ¾ a bushel for December delivery, taking its rebound since an early-September low to 21%. Its close was the highest for a near-term contract since late June.

Soybeans closed up 24.25 cents at $9.36 ¼ a bushel, faring considerably better than their vegetable oil rival palm, which ended earlier down 47 ringgit at 2,030 ringgit a tonne, the lowest close for nearly three months.

Selling has been encouraged by forecasts that data next week will show loosening market dynamics, with falling exports, and rising production and stocks.


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