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Evening markets: grains, eventually, decide on flying finish

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Grains nearly fluffed it. (And soft commodities were hardly stand-out performers.)

But the likes of

corn

and

wheat

in the end got into the party spirit engendered by overnight success (?) in talks over the eurozone rescue deal, and given a chaser by US economic growth for the July-to-September quarter which came in at 2.5% on an annualised basis.

It was hard for risk assets not to gain when shares were soaring - closing up 2.9% in London, 5.4% in Germany and 6.3% in Frankfurt, and up 3% in Wall Street in late deals – with other signals glowing green.

The Vix index, the "gauge of fear" slumped 15% to its lowest since early August, while the dollar, investors' favoured safe haven, plunged 1.8% against a basket of currencies to its lowest since September 6.

A weak

dollar

makes dollar-denominated assets more appealing by increasing their competitiveness on export markets, so it was little wonder that London

copper

rocketed 6%, while Brent

crude

stood 3% higher in late trading.

'Downright pitiful'

Still, they did not have dismal export data to deal with, like the grains, with the US Department of Agriculture revealing weekly US export sales of corn,

soybeans

and wheat all at 2011-12 lows, and way beneath market estimates.

Corn sales slumped 80% week on week, to 336,000 tonnes. Benson Quinn Commodities termed the data "downright pitiful for this time of the year".

Darrell Holaday at Country Futures added: "This put the grains on the defensive on the opening, especially corn and wheat."

Wheat shed overnight gains to return to unchanged, and corn nearly matched it.

Why the rebound?

But then the recovery set in, driven by external markets, but with some other ideas mentioned too.

There was a regulatory angle, with some talk that the Dodd-Frank Act changes to US financial regulation might not prove so bad to commodities markets as had been feared, in terms of limits to index fund positions.

There was the consumer purchasing angle.

"It feels as though some export buying occurred on the early break in the day session," Mr Holaday said.

And there was the plain old speculative buying idea.

"It may just be new money," Jerry Gidel at North America Risk Management Services said.

"It may be the guys who pulled out over the last eight or nine weeks, having got money burning a hole in their pocket, stepping in with a corn order."Herr

Prices recover

Whatever, the recovery was effective, and ended with the technically pleasing result for Chicago December corn of a finish above the 200-day moving average of $6.51 a bushel.

The contract ended at $6.51 ½ a bushel.

Chicago wheat did even better, soaring 4.0%, to $6.44 a bushel, and recovery $0.10 of its atypical discount to corn.

Soybeans, the most prone of the Chicago majors all year to rangebound trading, were more conservative, adding 2.0% to $12.35 a bushel for November delivery.

Corn beats wheat

Still, even soybeans did better than European grains, which were held back both by stronger currencies, with the dollar sinking, and their early closes, which missed the best of Chicago's performance.

Furthermore, weekly European Union export data were none too hot too, for wheat, with corn - unusually - proving more popular, at 165,000 tonnes. Wheat's were a meagre 163,000 tonnes, the lowest for some weeks.

Paris wheat for November closed up all of 0.1% at E186.75 a tonne. London wheat for November, facing less of a currency headwind, closed up 0.5% at £151.25 a tonne.

Limit-up lint

Among soft commodities, New York

cotton

starred, achieving a close up the exchange maximum of 4.0 cents, at 104.32 cents a pound, for the benchmark December contract.

Early strength was attributed largely to technical factors.

Influential trader Mike Stevens said that the contract's ability to close back above 98 cents yesterday looked like confirming "that the market has moved back into the 98-104 cents trading range" - unless an "additional catalyst or unforeseen fundamental event" comes along.

Two of those came along, with a 1m-bale cut, to 12.2m bales, by Pakistan in its cotton output forecast for 2011-12, following the heavy flooding.

Then US weekly export sales came in at a robust 385,100 running bales.

(As an aside, following Agrimoney.com's story on Wednesday of Egypt's cotton crisis, the country on Thursday unveiled an import ban to protect local farmers seeking high prices.)

Coffee falls back

But other soft commodities were more cautious.

New York raw

sugar

closed 1.9% higher, at 26.86 cents a pound for March, but kept to an "inside" day (moving within the boundaries of the last session's moves) still feeling some weight from industry data showing that a poor Brazilian cane crushing season was heading for an upbeat finish.

And New York arabica

coffee

lost most early headway to close 0.4% higher at 234.60 cents a pound, with bulls still wary over the amount of damage caused by storms in Central America.

By Agrimoney.com

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