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Evening markets: crops slip as funds' hunger fades

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US crops fell back in late deals to close broadly lower – with corn back below $4 a bushel - as the dollar turned higher, and spooked by an absence of the fund buying which has been so important in the rally over the last seven weeks or so.

Investors across financial markets drew in their horns a touch, sending oil and equities lower while reviving the dollar, which has become a measure of appetite for risk. A stronger dollar makes US exports such as crops more expensive to foreign buyers.

The cooler wind was felt too in farm commodities markets, which lost the early momentum which took corn and wheat to their highest levels in four months.

"The continued absence of aggressive fund buying is contributing to the relatively poor performance of the grains," Vic Lespinasse, analyst at GrainAnalyst.com, said.

Chicago vs Kansas

Funds' reluctance was also evident in Kansas wheat's recovery – just - of a premium over Chicago, after trading at a discount for much of the day.

December wheat closed down 4 cents at $5.47 ¾ a bushel in Chicago, which hosts far greater volumes of speculative activity, but ended down 3 cents at $5.49 ½ a bushel in Kansas, a relative strength which ran against the trend of recent weeks.

The sell-off came too late to drag down European wheats, which ended higher – firmly so in the case of London November feed wheat, which added £1.50 to £105.00 a tonne as poor economic data sent sterling sliding.

Paris milling wheat for November ended up E0.25 at E131.75 a tonne, after touching E135.00 a tonne earlier.

'Drier weather'

Chicago corn for December, meanwhile, ended down 5.75 cents at $3.97 ¾ a bushel, a move in part in tandem with its grain peer and in part reflecting a loss of momentum in the trend of ever-worsening weather to hinder the already-delayed US corn and soybean harvests.

"The updated weather forecast, for once, isn't uniformly wetter than the early morning version," Mr Lespinasse said.

"One forecaster is predicting… drier weather during the next one-five days in parts of Iowa, Illinois, Missouri, Indiana and Michigan."

Soybeans, nonetheless, which have been less dependent on fund buying, managed to keep their head narrowly above water, closing up 0.5 cents at $10.06 a bushel for November delivery.

Coffee spills

Funds seemed to be avoiding some softs too, with New York arabica coffee beans closing down 4.5% at $1.3715 a pound for December delivery.

Soft sterling couldn't save London robusta beans either, which ended down 4.9% at $1,366 a tonne.

Coffee has arguably the weakest fundamentals of the three core softs, with cocoa and sugar, which have been rallying of late.

Nonetheless, cocoa was mixed, closing up 0.8% in London and down the same in New York, moves consistent with currency moves.

Sugar was less easy to read, with New York doing better than London, although neither moving very far. Traders told Reuters the market was in "consolidation mode".

By Agrimoney.com

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