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Evening markets: jobless data adds to crop woes

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Crops took a downwards lurch at the end of a roller-coaster week, with wheat threatening to lose its grip on $5 a bushel, as weak US jobs data put a dampener on celebrations over the strength of the global recovery.

While unemployment levels are viewed as a lagging indicator of economic fortunes, reflecting what has happened rather than what is in the pipeline, statistics showing the US jobless rate had topped 10% and set a fresh 26-year high proved enough to provoke some of a sell-off of riskier assets.

While Wall Street shares had recovered near opening levels at 18:10 GMT, oil had no such luck, standing down more than 3% at around $77 a barrel.

Oil is a key indicator for crops, many of which are used as biofuels. Another signal is the dollar, which strengthened a touch as investors sought safety, making US exports like food commodities less competitive.

'Aggressive harvest'

If investors needed another excuse to sell, good US corn and soybean harvesting weather provided it.

"The weather looks conducive for harvest for the next 10 days," Iowa broker US Commodities said.

"Temperatures across the corn belt will be up 15-28 degrees [Fahrenheit] above normal the next couple days. Harvest progress is now aggressive."

Funds, whose early-month support gave crops such a good start to the month, ditching 3,000 soybean and wheat lots, and 4,000 corn contracts, by lunchtime.

Copy cats

While volumes were thin, with many traders staying on the sidelines ahead of key Washington data due next week, that only encouraged volatility.

"[Fund selling] is encouraging the funds' local followers to do the same and in this light volume trade today it is enough to keep prices under pressure in all pits," Vic Lespinasse, the GrainAnalyst.com analyst, said.

Soybeans' 1.4% drop to 953 ½ a bushel for November delivery, and by 11.25 cents to $9.60 ¾ a bushel for January, was the most resolute performance among the big Chicago crops.

Corn dropped 2.0% to $3.69 ¼ a bushel for December, with wheat for the same month down 2.2% at $5.01 a bushel.

The Ukraine factor

It was a better picture for wheat in Europe, in part because the markets were still basking in Thursday's 60,000-tonne success in an Egyptian wheat tender, besides getting some protection from weakening currencies.

Paris milling wheat for January, the best-traded contract, slid E0.25 to E131.25 a tonne, with London's January lot slipping £0.50 to £131.25 a tonne.

The market might have expected worse after Ukraine was reported as on the verge of raising its grain harvest forecast by 43m tonnes to 47m tonnes.

Ukraine and other Black Sea producers are proving thorns in the side of Europe's wheat exporters, winning Israeli tenders for 62,000 tonnes of feed wheat, 56,000 tonnes of corn and 20,000 tonnes of feed barley on Friday.

In fact it was rapeseed which had a particularly bad day in Paris, ending down E4.25 at E269.75 a tonne for February delivery as the weak Chicago soybean price, coupled with ever-improving forecasts for Brazil's bean crop, hit home.

By Agrimoney.com

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