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Evening markets: crops fight back against dollar

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Crops held up remarkably well given another chapter in the dollar's latest Lazurus-like revival, which have put it on track for its biggest weekly gain against the euro since April.

The currency move - blamed on short-covering as well as debt concerns in eurozone member Greece and growing expectations of a US interest rate rise – sent European shares lower and took some of the steam out of a recovery in oil.

Crops might have been expected to slide too, given that a rising currency makes them less affordable on export markets.

Soybean order

However, they gained some succour from the announcement of a further sale of soybeans to China, of 116,000 tonnes, albeit for the 2010-11 crop year.

"They continue to use setbacks as buying opportunities," Iowa-based broker US Commodities said, adding that the order was "surprising".

Traders are putting Chinese soybean purchases under the microscope, given the prospect of South America's harvest early next year which will end America's stranglehold on the export market.

Seasonal feeling

Informa Economics did its bit by trimming its estimate for this year's US corn yield – traders had expected a rise – and raising its planting guess for 2010 by less than the market had forecast too.

And there was the prospect of a winter storm to impede further delayed US corn harvest.

In broker Benson Quinn Commodities' words: "A Christmas storm is expected in an area on a line from Omaha, Nebraska to Green Bay, Wisconsin.

"Areas north of this line could expect between 5 and 14 inches of snow. Yeah!"

'Deeply oversold'

Still, it was actually wheat which was Chicago's strongest pit, for reasons which may have had little to do with fundamentals.

"Wheat is now deeply oversold," US Commodities said before the opening of play.

And funds did their bit to correct the position by proving net buyers of wheat, by some 2,000 contracts, by the afternoon according to Vic Lespinasse, the GrainAnalyst.com analyst.

Chicago's March contract stood 6.75 cents higher at $5.25 ¼ a bushel at 18:30 GMT, with corn for March up 1.25 cents at $3.98 ¼ a bushel.

Soybeans fared worst, down 7.5 cents at $10.14 ½ a bushel, if 6 cents above their intraday low.

'Tight supplies'

Some softs managed a robust performance too, with orange juice, for instance, adding 1.55 cents to $1.3435 a pound for March.

But sugar looked for a mixed close, after setting fresh peaks on both sides of the Atlantic as rains continued to pound Brazil, the world's biggest producer.

"The supply situation for sugar is still very tight," Commerzbank analyst said.

"In addition to the problems in India, where sugar farmers do not want to sell at low domestic prices, exports are falling elsewhere across the globe.

"The dry weather in Australia, the world's third largest sugar exporter, and the continued strong rainfall in Brazil, the largest sugar exporter, will reduce exports."

In New York, March raw sugar hit a fresh 28-year high of 26.94 cents a pound before retiring to stand down 0.4% 26.32 cents a pound in late trade.

London white sugar for March set a record of $687.20 a tonne before retreating to close up 2.3% at $678.30 a tonne.

By Agrimoney.com

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