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Evening markets: greenback turns grain prices red

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The strong dollar and favourable weather easily overpowered some firm indications on US exports to send grains Chicago grains lower, with European peers also sustaining losses.

The dollar rose to $1.3774 against the euro after supportive comments from Russia's finance minister and the IMF.

That sent agricultural commodities down across the board. Dollar denominated assets have a tendency of moving in the opposite way to the greenback, whose strength makes them look more pricey to buyers from abroad.

"The 100-point rally in the dollar is the chief catalyst behind today's move," Gavin Maguire, analyst with EHedger, said.

"Commodity markets have been on an impressive run the last two months or so, it's no surprise that we're getting a bout of overdue profit-taking."

Best of a bad bunch

It may have been slim compensation for grains investors that they did better than those in soft commodities.

Indeed, wheat's 1.5% decline to $5.76 ¼ at 1730 GMT looked chicken feed, as it were, compared with cocoa or orange juice, or indeed Chicago peers.

In London, November wheat lost £1.25 to £117.5 a tonne, protected somewhat by weaker sterling, with Paris November wheat down E1.75 at E146.00 a tonne.

Weekly US export inspections may have helped by coming in at 13.5m bushels, in line with forecasts.

Traders also said wheat had had some profit-taking already baked in, after already losing exactly $1 a bushel between its high at the start of the month and Friday's low.

Beans bomb

Corn, meanwhile, stood 3.8% lower at $4.09 ½ a bushel, its lowest for nearly a month. Although its US export inspections were also in line, at 31m bushels, the crop is suffering the extra bear factor of positive growing weather.

Many investors have jumped aboard corn in that hope that, with stocks wheat, any weather-related setback could send prices spiking.

Even soybeans were hurt, coming uncomfortably near falling back below $12 a bushel despite upbeat export inspections of 12.5m bushels.

July beans stood down 3.1% at $12.06 ½ a bushel, with some forward contracts showing even heftier losses. The November contract, for instance, lost 3.8% to 10.35 ¾ a bushel.

Earlier, palm oil cropped 3.7% to 2,375 ringgit a tonne, its lowest for nearly two months, in Kuala Lumpur on fears of rising production and waning exports.

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