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Evening markets: grains slip back to reality

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Fears that something negative was in the air, after a turn from a strong start to a weak close in the last session, proved justified as grains took a tumble on Tuesday.

Crops, which have spent much of the last week ignoring fundamentals, played ball, moving as analysts might have expected on a day with a somewhat firmer dollar, making US exports less competitive, and weaker oil.

Oil is often a leading moved for crops, many of which, such as corn and wheat, are used in making alternative fuels.

Not competitive

Wheat, the crop with the biggest global surplus showed the hugest loss, slumping 4.4% to $5.33 a bushel in Chicago for December delivery.

Higher volumes for March lot didn't save it much, with the contract ending down 4.3% at $5./53 ½ a bushel.

Nor did a potentially huge cut to China's wheat forecast, as identified by US staff in Beijing.

"US wheat needs a fall to get anywhere near competitive with Black Sea wheat, and to a lesser extent European too," a City analyst, who highlighted Monday's weak technical close, told Agrimoney.com.

'Funds are selling'

Corn, of which the world is less awash, but which is nonetheless in good supply in the US, dropped 2.9% to $3.77 ½ a bushel for December – its sixth successive lower finish.

The March lot, which was actually more thinly traded, dipped 2.8% to $3.92 a bushel.

"Funds are still selling corn, now estimated around 8,000 lots for the day," Vic Lespinasse, GrainAnalyst.com analyst, said towards the close.

Lower prices won't do corn's export prospects any hard either, after a poor start to the 2009-10 year.

China buying

It was left to soybeans to show mettle, with the January contract adding 4 cents to $10.47 ½ a bushel.

There was some bearish news around, with Brazil reported to be ahead in plantings, 74% compared with 67% a year ago.

And a US attaché in Brazil pegged the country's 2009-10 crop at 63.6m tonnes, 600,000 tonnes higher than Washington is currently forecasting.

But investors have been reassured by persistent and strong buying of US soybeans notably as a livestock feed by China, which produces more than half the world's pork and eggs.

"It is now being debated if China can offload all the purchases," Iowa-based broker US Commodities said.

There was no such luck for Europe's main oilseed, rapeseed, however, which in Paris ended E2.25 lower at E279.75 a tonne for February delivery

January wheat dipped E2.50 to E131.75 a tonne for January, and in London by £0.75 to £107.25 a tonne.

Defiant juice

Softs were also a little under the weather too, amid thinner trade ahead of the Thanksgiving holiday on Thursday, and with the stronger dollar taking some of the blame.

Cocoa and coffee fell, while sugar was mixed, easing 0.06 cents to 22.08 cents a pound for New York's March raw sugar contract amid technical concerns.

"One feels that the market will now have to overcome and close above the 100 day moving average before it will be able to challenge the 23.00 cents a pound mark," David Sadler, at Sucden Financial Sugar, said.

White sugar for March ended up 0.80 cent at $599.50 a tonne in London.

Orange juice returned to its typical position of moving the opposite way to the rest of the market, adding 0.45 cents to $1.1205 per pound amid lingering concerns for the orange crop in Florida, America's biggest citrus state.

By Agrimoney.com

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