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Evening markets: crops get into holiday spirit

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Friday was advertised as an unadventurous day, ahead of the long weekend in the US. It failed to live down to its billing.

Fund buying, a strong oil price, a weaker dollar, recovering stocks – the ingredients came together for something more ambitious.

And wheat took centre stage, rising 3% to its highest since late January. Even the weather seemed behind it, with more rain forecast for the US wheat powerhouse of North Dakota, which is already well behind with planting its spring crop.

Meanwhile, dry weather is beginning to exacerbate doubts for Black Sea crops.

'Even more speculative buying'

"Selling has dried up in wheat, encouraging even more speculative buying in this pit," Vic Lespinasse, at GrainAnalyst.com, said.

Dan Cekander, an analyst at Newedge USA, told Reuters: "Fund money is coming into commodities. That's what's going on more than any fundamental reason.

"You have the weak dollar and the stock market is rebounding nicely. That's all supportive."

Chicago wheat for July ended up 19 cents, or 3%, at $6.12 ½ a bushel, with later contracts making similar gains. The July and December 2010 and July 2011 contracts all closed above $7 a bushel.

European reaction

European contracts showed just how important was the weaker dollar, which fell to its lowest point this year against a basket of currencies as concerns remained of a possible downgrade of US government debt following Standard & Poor's warning to the UK on Thursday.

In London, July wheat added a relatively modest £1.75 to £122.00 a tonne, with the November contract doing best, up £2.35 at £131.00 a tonne.

Paris wheat added E1.75 to E152.50 a tonne for August. Its best performer was May 2010, up E2.00 at E162.50 a tonne.

Wheat's performance, with a little help from rain forecast for the eastern US corn belt this weekend, helped corn close higher too, up 6.25 cents at $4.30 ¼ a bushel for July, with similar gains across the range.

The poorest performer, for once, was the soybean, which ended 9 cents lower at to $11.66

per bushel for July, losing some of its premium over new crop contracts, which showed solid rises. November, for instance, added 8 cents to $10.31 ½ a bushel.

Juice juicy

Elsewhere, hogs rallied too, although technical factors were credited for much of that, as speculators happy with short positions for so long after swine flu closed them ahead of the long weekend.

June hogs added 1.2% to 65.975 cents a pound, with their July comrades up 1.1% at 67.575 cents a pound.

And orange juice closed 1.6 cents higher at 91.70 per pound, a rise some traders also credited to the forthcoming start of the US hurricane season, which can affect Florida, America's biggest citrus producing state.

Meanwhile, New York coffee for July briefly touched $1.3740 a pound, its highest since late September, before closing down 0.80 cents at $1.35 a pound on profit taking.

By Mike Verdin

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