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Evening markets: crops feast on US economic upturn

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Food commodities rediscovered their forward gears after official data showed the US economy growing for the first time in more than a year, and faster than analysts had expected.

Confirmation of the end of America's longest period of economic contraction since the Great Depression, with output growing by 3.5% in the third quarter, revived investors' appetite for risk, which had failed up to now this week.

Their exodus from the safety of the dollar sent the currency sliding on foreign exchange markets, slipping to $1.4858 against the euro, and making US exports such as crops more competitive.

US shares were 2% higher as of 19:00 GMT, with the UK's FTSE 100 index ending up 1.1%.

Oil - a key indicator for crops, many of which are made into biofuels – jumped 3.4%.

Soy revision

With some bullish fundamental news around too, crops – including softs - made headway after a miserable start to the week.

For the soy complex, the positive price news came from the US Census Bureau, which cut by 140m pounds, to 2.74bn pounds, its estimate of US soybean oil stocks as of September.

"Usually, there is only a very small difference, a few million pounds, between the figures," Vic Lespinasse, at GrainAnalyst.com, said.

More rain

All the big farm crops had the fillip of a worsening in the weather forecasts for the Midwest, promising further harvesting and sowing delays.

"Wheat has rallied along with corn and beans this afternoon following the wetter forecast in the six-10 and 11-15 day forecasts," Mr Lespinasse said.

"Until farmers can harvest corn and beans in the Midwest, they can't plant soft red winter wheat, which is frequently planted on the same land, especially bean acreage."

There was some less ideal news, for bulls. The International Grains Council added 8m tonnes to its forecast for America's corn crop, signalling that it believed the late harvest to have done little damage.

Still, funds took a positive stance, reversing their sales of earlier this week and helping corn lead the Chicago rally. December corn added 2.9% to $379.5 a bushel.

Soybeans for November picked up 1.8% to $9.85 ½ a bushel, a percentage gain in line with December wheat, which closed at $5.03 ¾ a bushel.

'Profit-takers have had enough'

The event was not missed in Europe, despite the strengthening euro, where November milling wheat ended up 1.6% at E129.75 a tonne in Paris, with November feed wheat adding £2.50 to £103.00 a tonne in London. Rapeseed for November gained E2.75 to E265.00 a tonne

"The profit-takers have had enough," Hugh Schryver, at Glencore, said.

Not that the future is without potential hiccups traders.

The rapeseed market, for instance, is awaiting news in talks between Canada and China over plans to restrict imports of Canadian canola, Mr Schryver said, as well as "clearer signs about crop prospects in key exporter Ukraine".

On feed wheat, rival grain merchant Gleadell said: "The fundamentals of the market are that there is plenty of supply around but the market will rally at times due to fund activity and currency fluctuations and these rallies remain a selling opportunity."

Sugar bounces

Softs also had a decent day, notably sugar which jumped 3.2% to $576.6 a tonne in London for December delivery.

In New York, raw sugar for March, the benchmark contract, soared 4% to 22.81 cents a pound, closing near its day high.

Besides the return of funds, and the help of the dollar, the commodity was spurred by a batch of favourable analyst comment from the likes of Rabobank and BNP Paribas Fortis.

By Agrimoney.com

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