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Evening markets: crops take chart signals in pre-data nerves

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There was enough worry around to sink many risk assets.

What, with Greek debt worries reasserting themselves and US house sales rising less than had been expected, besides the HSBC data earlier on showing China's manufacturing sector shrinking for a fourth consecutive month.

Shares

struggled on Western markets, losing 0.9% in Frankfurt and 0.2% in London and in New York (in late deals). The safe haven of the

dollar

added 0.2%.

Chart help

But commodities overall bucked the losing trend, just, rising 0.1% according to the CRB index.

And many agricultural commodities did considerably better, if only largely for technical reasons, with strong oil prices giving a boost to raw materials such as

corn

and

sugar

linked to energy through ethanol production.

Indeed, New York raw sugar had a stormer, jumping 1.6% to a three-month high of 25.76 cents a pound for March delivery, and by 1.0% to 24.71 cents a pound for the better-traded November lot.

This after the May lot managed to break through its 200-day moving average, at 24.57 cents a pound, which as Commonwealth Bank of Australia noted earlier, has provided a technical ceiling to upward movement.

'Bit between their teeth'

"With values currently steady, it seems that the speculators have the bit between their teeth and are going long," Nick Penney at Sucden Financial said, also noting talk of a large buyer waiting in the wings to snap up deliveries against the March contract.

Sure, on fundamental terms, "it is hard to be bullish" given expectations of a return to surplus this season.

"But occasionally the market reacts to outside factors and deep pockets are needed to run positions. Some shorts have bailed out and may have even gone long."

Looking at the chart, "the range in the markets has got tighter and tighter over the past two weeks so it was inevitable that a breakout would occur", even if it might have been expected to be a downward move.

'Increasing accuracy'

In Chicago, grain investors looked to guidance from charts too, in the tension ahead of a key conference on Thursday and Friday, when the US Department of Agriculture will unveil refined expectations for US crops in 2011-12.

Both

corn

and

wheat

bounced off 50-day moving averages, rising clear in late deals, before struggling to get through their 14-day lines.

Upward pressure was reinforced by an unwinding of the long

soybeans

, short corn/ wheat spreads which have been all the vogue of late, but in which many investors took profits ahead of the USDA estimates.

After all, "the importance of these numbers has grown in the last several years", US Commodities said.

At Standard Chartered, Abah Ofon said there was "a growing focus" on the data "given its increasing accuracy".

Last year, data in a much-watched end-of-March sowings report, based on farmer surveys, at 92m acres for corn and 78m acres for soybeans "matched" initial USDA forecasts the month before.

'Moisture is very welcome'

Corn for March closed up 1.4% at $6.38 ¼ a bushel, while March wheat gained 1.8% to $6.44 ½ a bushel.

This was ahead of soybeans, which recovered in late deals to close up 0.1% to $12.72 ¼ a bushel for March.

News on fundamentals was mixed for mixed-to-negative for grains, with Ukraine again denying curbs on wheat exports, but saying traders did not expect to sell much anyway, while expectations of snow this weekend eased concerns for dryness in northern US corn country.

"The updated forecast calls for at least 0.75 inches of moisture, and up to 1.2 inches, this week with recurring rain and snow showers," Gail Martell at Martell Crop Projections said.

"Moisture is very welcome after prolonged drought."

Soybeans had the boost of yet another order of US crop from China, this time of 175,000 tonnes, but faced the negative, for prices, of more rain due for dry areas of South America.

Too late

The bounce in Chicago grains came too late to provide much of a lift to European contracts.

Paris wheat for May, the best-traded lot, added 0.1% to E205.25 a tonne, while London's May lot closed unchanged at £166.50 a tonne.

However, the pattern of stronger grains than oilseeds was entrenched, with

rapeseed

for May easing E0.25 to E457.25 a tonne, if still remaining near an eight-month high.

The oilseed is being underpinned by ideas that European and Ukrainian winter rapeseed crops have been especially badly hit by the cold snap earlier this month.

Goldman downgrade

Still, back in New York, some soft commodities saw far steeper gains, with

cotton

for March tumbling 2.9% to 88.57 cents a pound, its lowest close of the year.

Again, technical factors were seen playing a part, with the lot closing the last session below its major moving averages, of which the 14-day crossed down below the 50-day, a negative sign.

And, on this lurch lower, end user demand did not charge in to rescue the fibre.

And

coffee

for May closed down 2.0% at 201.85 cents a pound, following an easing from Goldman Sachs in price forecasts, saying that the "2012-13 supply response to recent high coffee prices will likely generate a surplus under average weather conditions".

By Agrimoney.com

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