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Evening markets: crops convert improved mood into some gains

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Sometimes history repeats itself so closely it's almost spooky.

Corn's

close at $5.99 a bushel for December delivery, a hard-fought 0.2% rise on the day, took the lots losses since November 1 to $0.61 a bushel.

That is but 1 cent from the fall of $0.62 recorded over the same period last year.

"Some are surprised by the fact that corn price movement last year during November is very similar to the price movement this year," Darrell Holaday at Country Futures said.

But "normally, a seasonal low occurs in the last week of November into the first week of December".

Last year, the December contract rallied $0.58 from its December low to expiry, he added.

IMF help

Such apparently strong seasonality was one point in corn's favour on Tuesday, to give the grain its first positive close, even a small one, in five sessions.

But so were signs of improvement in the macroeconomic picture, helped by a statement by the International Monetary Fund that it would help eurozone countries get over liquidity problems caused by the debt crisis.

"This past week's liquidation seeming to take a pause," Benson Quinn Commodities said.

Brent

crude

showed gains of 1.9% in late deals, leaving it just short of $109 a barrel, a positive sign for crops such as corn used in biofuels.

'Relatively cheap'

And if history is back in vogue, that indeed bodes well for Chicago crops, which have a record, especially

soybeans

, of closing higher both the day before and after Thanksgiving.

On Thanksgiving Eve, the record for soybeans is 27 positive finishes in 36 years, Agrimoney.com believes, but has not double checked.

The oilseed appeared to be gearing up to add 2011 to its list, ending up 0.4% at $11.53 a bushel for January delivery, recovering from a fresh 13-month low of $11.41 a bushel earlier.

Stronger prices of

soyoil

, which added 1.8% to 50.78 cents a pound for December, were one support, with the vegetable oil now looking relatively cheap against rival palm oil, following the latter's revival this month.

"Soyoil, while maintaining its premium over palm oil, is relatively cheap," Michael Haigh at Societe Generale said.

"We expect global demand for soyoil to remain high, in the face of strong demand for palm oil, and the resulting strong demand for substituting vegetable oils."

'Could become a concern'

The prospect of drier weather in Argentina also rang a few alarm bells, it being a La Nina year.

"South American weather for Argentina and Southern Brazil is drier with slight rain chances for the next two weeks. This could become a concern if dryness continues," US Commodities said.

In fact, Oil World cut its forecast for the Argentine soybean crop by 1m tonnes to 52.0m tonnes, if balancing it with a 1m-tonne upgrade, to 74.3m tonnes, in the estimate for the Brazilian harvest.

The China factor…

But there was also a broader feeling that agricultural commodities may have suffered enough for now, with further positive comment on wheat prices, as well as ideas from Societe Generale and Standard Chartered of corn heading back off above $7 a bushel.

And not just because, as US Commodities noted, "bulls are upbeat that lower prices will entice more Chinese buying".

In wheat, the sentiment manifested itself in a 0.4% rise to $5.94 a bushel in the Chicago contract, recovering from a four-month closing low to the last session, although the move could not be repeated in the March lot, which shed 1.0% to $6.03 a bushel.

Nor did it find any traction in Minneapolis, where the December hard red spring wheat lot plunged 4.0% to $8.60 ¼ a bushel, a decline blamed on profit-taking in a grain which has remained remarkably firm, supported by the squeeze in supplies of quality wheat.

But it was echoed in Europe, where January wheat added 0.7% to E181.25 a tonne in Paris, with London wheat for May, the best traded contract, ending up 0.3% at £146.50 a tonne.

Late recovery

Buying emerged in

cotton

too, late on, to help New York's March lot nearly close above the key 91.25-cents-a-pound mark, the summer low.

While closing deals were struck at 91.51 cents a pound, the contract settled at 91.12 cents a pound, up 0.8% on the day.

The December contract recovered most of its ground lost earlier to settle at 89.95 cents a pound.

But there was no reprieve for raw

sugar

, which tumbled 2.7% to 23.44 cents a pound for March, a five-month closing low, after India agreed 1m tonnes of sugar exports.

That was "more and earlier than was being expected by the markets, thereby getting the chatter going of more to come", Scott Briggs at Australia & New Zealand Bank's London office said.

By Agrimoney.com

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