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Evening markets: funds shield crops from rising $

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Crops managed a surprisingly robust performance given a sharp rebound in the dollar, which took somewhat delayed comfort in words of support from the head of the US central bank.

Ben Bernanke's statement on Monday that he was "attentive to implications of changes in the value of the dollar" belatedly sparked as rally in the greenback, which added 1% against some major currencies including the euro, which dropped to $1.4809.

However, while many markets such as shares took fright in a dollar move which implied a waning appetite for risk – and made US exports less competitive – crops held firm.

While a little below intraday highs wheat and soybeans stood firm in late trade in Chicago, with December corn down a touch (1.75 cents) but not broken, keeping its head 0.5 cents above the hard-won $4 a bushel mark.

'Fund buying interest'

The resilience was credited to interest from investors interested in a market which has remained relatively untouched by the 2009 rally, and which offers some insurance against inflation fears.

Commodity markets were experiencing "a great deal of consumer and fund buying interest", US Commodities, the Iowa broker, said.

In Illinois, Allendale said of wheat: "You can not argue the trend in this market is higher. There is still no fundamental news to back it up but… there is obviously no doubt wheat wants to move higher."

Vic Lespinasse put it so: "Funds are on the buy side, adding to their long positions in all pits except wheat, where they are covering shorts."

Argentine drought

Chicago's December soft red winter wheat contract stood 9.5 cents higher at $5.71 ¾ a bushel at 19:00 GMT, retaining its premium over its Kansas hard red winter wheat peer.

Soybeans were 12.5 cents higher at $10.22 ½ a bushel for January, and were backed by at least some bullish fundamental news.

Oil World, the influential German analysis group, cut by 2m tonnes to 48m tonnes its forecast for Argentina's 2009-10 soybean production, citing drought, and raising the prospect that the US will not face such strong South American rivalry on export markets next year as had been feared.

Paris high

Currency movements, and Chicago's strength, helped European crops gain too, although the improvement was not as large as might have been expected given the double boost.

Still, Paris milling wheat's E1.25 rise to E134.75 a tonne for November delivery was enough to send it to the best close for four months for the spot contract.

There were no such accolades in London, where November feed wheat ended £0.10 higher at £105.15 a tonne.

Lingering concerns over the abundance of cheap Black Sea wheat was blamed for the relatively soft performance.


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