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Evening markets: gold helps crops recover lustre

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A slide in the dollar to its lowest for nearly a year, amid inflation fears stoked by rising gold, helped Chicago corn and soybeans out of week-long slides, but failed to stop wheat slipping to fresh lows.

Gold's rise above $1,000 an ounce revived concerns of rising inflation sending investors rushing for assets rather than the dollar. Oil soared 5%. Gold is often viewed as a key indicator of investor sentiment on price rises.

Soybeans reacted best to falls in the greenback of more than 1% against both the euro and a basket of major currencies.

As well US beans might, given their reliance on foreign buyers for demand. The weaker dollar will make them more competitive to foreign buyers.

Palm aid

Indeed, there were rumours that China was back in the market for US beans, after a quieter spell last week. Many investors had hoped that lower prices would lure the world's biggest soybean buyer back.

Soybean sentiment was also helped by a strong close for Kuala Lumpur palm oil with, again, firm Chinese demand implicated.

The old crop September contract, now in its last week of trading, added 3.5 cents to $9.64 ½ a bushel at 16: 30 GMT.

Better-traded November beans added 11 cents to $9.33 a bushel.

Corn rebounds

Corn, too, recovered, but not before revisiting prices not seen for nearly three years.

The best-traded December contract slid to $3.02 a bushel, the lowest for a nearest-but-one contract since October 2006, before recovering to stand up 3.25 cents at $3.09 ½ a bushel.

September corn slid to a 2009 low of $2.96 ¾ a bushel before recovering to $3.04 ¾ a bushel, up 3.75 cents.

With corn a major feedstock for bioethanol, the rebound was helped by a 5.0% jump to $71.40 a barrel in the price of New York light crude for October.

Odd crop out

Wheat was the odd crop out. The September contract shed 1.4% to $4.37 ¾ a bushel, a fresh lowest-since-April-2007, and stayed there or thereabouts.

The better-traded December contract set a similar low by dropping to $4.61 ½ a bushel before reviving somewhat to $4.65 a bushel, down 1.4% on the day.

The round of upward crop revisions continued on Tuesday with France adding 1.22m tonnes to its forecast for this year's harvest.

Sugar squeeze

Among soft commodities, sugar staged a far convincing recovery, helped by comments from Czarnikow, the sugar merchant, that the market had "more work to do" in rationing sugar demand.

Stocks had fallen to "unsustainably low levels", Czarnikow said, pegging the 2009-10 sugar deficit at 9m tonnes.

London white sugar for October closed down $0.60 a tonne at $520.00 a tonne, having touched $507.30 earlier.

New York sugar recovered from a low of 20.57 cents a pound to 21.23 cents a pound, down 0.37 cents on the day.

Cocoa did better, ending up 1.5% at £1,858 a tonne in London and by the same margin at $2,961 in New York.

By Agrimoney.com

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