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Evening markets: crops mixed as fund talk recedes

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Crops managed a mixed finish in Chicago as good old supply-and-demand data gained some attention from traders for whom fund purchases have been the big theme for weeks.

Not that the prospect of fund buying, prompted by fresh money and reweighting, disappeared.

Indeed, many are only expecting reweighting to get into gear later this week, as multi-commodity funds snap up 2009's laggards, such as grains, to bring weightings back to base levels.

But the wave of buying that traders expected to wash-up in Chicago in late deals once again turned out to be something of a ripple.

It was enough to help crops close well above day-lows, but only wheat managed a substantial gain, ending up 2.6% at $5.67 ¼ a bushel for March.

March corn edged 3 cents higher to $4.21 ¾ a bushel, a fresh six-month closing high, while soybeans ended down 1.75 cents at $10.51 ½ a bushel for January and off 2 cents at $10.59 a bushel for March.

'Negative psychological impact'

Soybeans' problem was China's introduction at the start of the month of import licences for the oilseed.

Broker Benson Quinn Commodities said: "Licenses will be issued in 10 days and could temporarily back up shipments at ports till the license has been issued."

Vic Lespinasse, the GrainAnalyst.com analyst, said: "This is being viewed as a potentially bearish development as it will give the government more control over bean imports.

"Previously, importers didn't need a license and the fact they now do need one is having a negative psychological impact on soybeans."

This added to soybean woes which have centred on the prospect of a strong South American harvest.

Indeed, Brazil is poised on Thursday to reveal fresh official estimates, a move expected to see an upward revision to the current 64.7m-tonne forecast.

"Some on-the-ground estimates are at 65m-68m tonnes," broker US Commodities said.

Oil dipper

Corn's moves reflected in part the movements of oil, a key influence on a crop used largely to make bioethanol.

And crude, while initially struggling to swallow data showing a rise in US stockpiles, recovered from nearly $1-a-barrel down to stand more than $1-a-barrel higher as cold weather in Europe, North America and parts of Asia stoked thoughts of higher energy usage.

And cold boosted wheat too, by warranting some risk premium for winterkill of autumn-planted crops. At least for investors who could ignore the huge global supplies of the grain.

Wheat sowings

Wheat was also helped by the appearance of a batch of Washington agriculture reports due next week, which are expected to reveal a sharp cut in American winter plantings.

"We expect to see a 1.9m-acre drop," Illinois-based Allendale said.

The grain's rise in Chicago failed, however, to find much of an echo across the Atlantic, where Paris wheat for January ended E0.50 lower at E130.25 a tonne and London feed wheat for January ending down £1.10 at £107.60 a tonne.

A stronger euro didn't help, getting to $1.4434 against the dollar after a US central bank report signalled the potential need for more economic stimulus.

'Overbought' sugar

Softs, meanwhile, were on better form, with white sugar for March posting a fresh record of $736.70 a tonne in London, before retiring a touch to close up $8.40 at $731.40 a tonne.

New York raw sugar closed up 2.7% at 28.38 cents a pound, its strongest finish for nearly 29 years.

The strength of crude helped, given much cane is used to make ethanol, as did stronger sugar prices in India, the biggest consumer of the sweetener.

Bears, meanwhile, appear to be being pressed to the sidelines. "Producer selling has been sporadic at best and, while technically overbought, there is a marked reluctance to short [sugar]," Nick Penney at Sucden Financial Sugar in London said.

As for orange juice, which has soared this week on talk of potential cold weather in America's biggest citrus state, Florida, it ended 1.50 cents lower at 142.05 cents a pound, despite some reports of limited frost damage, and talk of another freeze later.

"Freezing temperatures are possible at times during the next five days causing some damage to fruit on the trees," forecaster DTN Meteorlogix said.

By Agrimoney.com

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