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Evening markets: crops toil to hold gains amid euro-doubts

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Soft commodities, reluctant in the last session to join the financial market celebrations at the accord for tackling the eurozone debt crisis, were even more miserable on Friday, posting losses in the main.

To be fair, many risks assets found it hard to maintain upward momentum, especially after rising Italian bond yields, which came within an ace of 6% for 10-year notes, raised concerns about just how defeated the eurozone's problems are after all.

Many

stockmarkets

showed losses, if modest ones, with London shares shedding 0.2% and Paris stocks 0.6%. Wall Street shares were fractionally lower in late deals.

The

dollar

regained 0.3%, a headwind for dollar-denominated assets by making them less competitive as exports, and certainly

oil

struggled, with Brent crude dropping back some 1.8% to $110 a barrel.

Data ahead

Still, that was better than New York raw

sugar

could manage, with a 2.6% slide to 26.15 cents a pound for March delivery.

The decline was attributed in part to waning ideas of hurricane damage to Central American cane, and flood damage to plantations in Thailand, the second ranked sugar exporter.

Indeed,

rice

, of which Thailand is the top exporter, dipped 1.2% to $16.740 a hundredweight in Chicago, despite a government estimate that up to one-quarter of the main rice crop may be lost of the inundations.

One trader Agrimoney.com spoke too also had a theory that the decline was linked to early leaks ahead of upgraded estimates due on Tuesday from Unica, the Brazilian cane industry group, of output in the key Centre South district.

Certainly, there have been some intriguing moves ahead of previous Unica statements.

Whatever, Nick Penney at Sucden Financial said that "the market is factoring in final sugar output of around 30.5m tonnes. A sub-30m tonne estimate would push prices up".

'I feel stupid'

New York

cocoa

for December dropped 0.3% to $2,748 a tonne, running out of buyers with the bean's supplies looking generous.

At least, most buyers, with softs trader Jurgens Bauer potentially still on the sidelines, after confessing earlier that "I feel stupid for not having gotten long, and now find myself trying to find a spot to do so. It is frustrating. Looking to buy a dip".

While New York

cotton

did manage to add to its limit-up close of the last session, it was hardly impressive stuff, with a finish up 0.05 cents at 104.37 cents a pound for December.

Mr Bauer noted doubts that strong US export data on Thursday were all they were cracked up to be, with "some suspicions as to whether those sales to China were on a consignment basis".

'La Nina is still alive'

Against that background, Chicago corn's 0.5% rise to $6.55 a bushel for December delivery looked positively sparkling – and technically pleasing too in lifting the lot clear over its 200-day moving average, a key technical level, by the biggest margin in a month.

The rise was attributed in part to some lingering concerns about Argentine sowings.

"The La Nina is still alive and means Argentina is at risk for dryness if it continues," US Commodities.

And, on the demand side, even if Thursday's US export data were dismal, at least the country's own users are showing signs of buying.

"What we are learning is that the exports will be more selective in purchases, when the price is right they will purchase, not on rallies," the broker said.

"The domestic end user for now is mildly chasing rallies as the crush in biofuels and livestock remains positive. Basis levels have improved at the Gulf the end of the week."

Crop deterioration

Corn's performance helped lift

wheat

too, albeit by only 0.5 cents to $6.44 ½ a bushel for December delivery, with the crop concerns Agrimoney.com highlighted on Thursday staying alive, like La Nina.

Ukraine's farm ministry said that the amount of sprouted Ukrainian winter grains (mainly wheat) rated poor had grown to 39% as of Thursday, up 10 points from Monday.

Weather conditions during sowing were "extremely difficult or critical", with drought affecting most regions.

And in the US, while some detected forecasts of rain for the dry southern Plains – "some weather models are pointing to a weather pattern change in about two weeks," said Darrell Holaday at Country Futures, others were more sceptical.

"If the trade actually believes the weather pattern is improving I feel sorry for you. It isn't and it doesn't appear to have a chance for the next 30 days heading into hibernation," GrainAnalyst trader Matthew Pierce said.

'Another problem'

While central Oklahoma had seen "some good rains that will help stabilise their crop, what comes over the next five days is another problem", he said.

"Temperatures climb right back into the mid-80s [Fahrenheit] with 30-40 mile-per-hour winds over a majority of the region. This will sap a majority of the top soil moisture."

He added that he was a "stalwart bull" for prices of hard red winter wheat, the type grown on the southern Plains, and traded in Kansas.

In fact, the December contract closed flat there at $7.38 a bushel.

'Bleak outlook'

Not that European wheats, which underperformed last session as the dollar plunged and euro soared, did better this time with that currency dynamic unwinding a bit.

Weak exports are one reason, following the soft weekly figure of a little over 160,000 tonnes released on Thursday, as the region struggles to compete against lower priced Black Sea supplies.

"Current fundamentals still point to aggressive sellers of Black Sea wheat, with Russian and Ukrainian wheat offered at considerable discounts to European supplies," David Sheppard, managing director of UK merchant Gleadell said.

"The potential for dramatic change in the current pricing structure in the short-to-medium term looks unlikely, leaving the EU export outlook bleak."

Furthermore, rains this week have relieved uncomfortable dryness in Europe too, which, near Agrimoney.com's headquarter in the west of England, saw winter wheat irrigated for the first time on record.

London feed wheat for November managed to close up 0.8% at £153.00 a tonne, but Paris milling wheat for November ended flat at E186.75 a tonne.

By Agrimoney.com

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