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Evening markets: late buying spree saves grains, at least

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Did the beginning-of-the-month buying arrive after all?

The Halloween experience which followed over from the last session into most of the trading day on Tuesday weakened its grip in late deals, allowing

corn

and

wheat

at least to close higher.

External markets certainly helped, with the worst of the storm passing by the time agricultural commodity markets closed, with the Dow Jones Industrial Average share index trading some 100 points off its low (if still down 1.5% or so) and the dollar's gains curtailed to a less greedy 1.2%.

(The market frights were provided by, besides the continuing dismay at Greece's decision to hold a referendum over its bailout/austerity package, a struggle by Italy to tackle its budget deficit, and soft Chinese manufacturing data.

Meanwhile, Australia's central bank added its voice to warnings over world economic growth as it cut interest rates for the first time in more than two years.

And the MF Global bankruptcy crisis took a new twist with a revelation that the broker had failed to comply with rules in segregating its own positions from its customers' ones).

'Dryness affecting seeding'

But there was also talk of a wave of end-of-session money arriving in Chicago, with the name Goldman Sachs attached to the speculation.

Beginnings of month are by repute times when funds push fresh money into agricultural commodities, with the injection this time seen potentially to have been boosted by the amount of funds withdrawn since late August, "burning holes in investors' pockets", as one analyst put it.

And bulls could gain some fundamental support from weather forecasts

"The watch is now on the La Nina affecting South American producers," US Commodities said.

"Dryness is already affecting seeding of the crop in Argentina. Continued dryness is affecting the Ukraine, European, and south US crops."

That said, weather service WxRisk.com became more optimistic over prospects for Argentine rain, forecasting that "portions of Cordoba, Santa Fe and Buenos Aires states will see near normal rainfall" over the next week, even if north east areas "run dry".

'Frenetic action'

Whatever, grain markets showed a marked, late recovery.

"The last 15 minutes saw Chicago corn trade up nearly 10 cents. The December contract exploded through the 200-day moving average of $6.52 a bushel," a London analyst said.

"Action into the close was frenetic."

The December lot actually finished up 1.1% at $6.54 ½ a bushel, helping December wheat gain 0.3% to $6.30 a bushel.

'MF Global pressure'

The buying did not get very far into the oilseeds complex, with

soybeans

closing down 1.3% at $11.92 ¼ a bushel for November, albeit comfortably above a low of $11.80 ½ a bushel hit earlier.

Nor could it revive

cotton

, which tumbled 2.7% to 99.54 cents a pound for December delivery.

Liquidation related to the sell-off of MF Global positions "is definitely putting a lot of pressure on cotton futures and options", renowned trader Mike Stevens said from Louisiana.

"A strong dollar for second day and weak outside markets are of course contributing."

Softening softs

And

cocoa

had a shocker, falling 3.6% to $2,600 a tonne for December delivery, with the bearish markets encouraging speculators to get over reticence at increasing a net short position in the bean.

"For those interested in playing cocoa from the long side it will be important to see that market show the ability to hold first. Then call spreads, or cheap outright calls may be worth a shot," softs trader Jurgens Bauer advised investors interested in picking up the bean in hopes of a bounce.

Not even

coffee

could manage that, despite data showing the number of bags certified for delivery against New York futures falling again, by 250 bags t5o 1.27m bags, the lowest since February 2000.

The December lot closed down 1.5% at 223.65 cents a pound, if well above a day low.

By Agrimoney.com

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