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Evening markets: crops falter as rain break nears

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Crops neared the end of the week on a defensive note, dented by profit-taking by investors with long positions, and some thought by short investors that they may be on to a winner after all.

Investors with short positions, in wheat especially, were caught out when the weaker dollar combined with the prospects of frost damage to US corn crops sent prices soaring, a London trader told Agrimoney.com.

However, many were now feeling more comfortable, given that forecasts showed improving US weather, and, with supplies ample, to quote Strategie Grains: "There are few real factors with the capacity to push up prices."

'Harvest pressure'

The rally in oil prices - often a key indicator for crops, many of which are used in biofuels - ground to a half at below $78 a barrel. The dollar strengthened, making US exports, including crops, less competitive.

And the break in the rain which has slowed much of the US corn and soybean harvest looks likely to last until Tuesday.

Furthermore, Morgan Stanley analysts noted the potential for prices to fall as crops hit the silo.

"Absent further weather disruptions, we contend that the market is likely to feel some harvest pressure as farmers are able to get into their fields," the investment bank said.

Inflation fear

That said, further rains are currently forecast for later next week, limiting short-investors' ability to crack open the champagne just yet.

And, as Hugh Schriver at Glencore said: "Inflation seems to be the fear gripping investors at present and commodities are seen as protection against this."

Chicago corn prices yo-yoed around par, standing up 0.5 cents at $3.73 ½ a bushel at 17:30 GMT for December delivery.

Soybeans for November were 1.25 cents lower at $9.81 ¾ a bushel.

And wheat for December was 4.5 cents lower at $5.00 ½ a bushel. Kansas's December lot matched the deficit, falling to $5.13 ½ a bushel.

Weaker euro

European wheats did better, helped by a weakening euro, which dropped back below $1.49 against the dollar.

Paris's November contract closed unchanged at E126.75 a tonne. London actually made a little ground, against continuing firmness in sterling, ending up £0.20 at £101.00 a tonne.

By Agrimoney.com

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