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Evening markets: mass of moving parts leads crops upwards

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Investors plugged a mass of influences into their agricultural commodity strategies and came up with broadly positive results - notably for

sugar

, which soared 6%.

The backdrop was certainly firm, with broader financial humming to the tune of upbeat US jobs data, showing US companies hiring more than twice the number of workers that had been expected, and new claims for unemployment falling more than anticipated last week.

The European Central Bank lent a hand to sentiment by saying it would waive a minimum credit rating requirement on accepting Portugal sovereign debt, avoiding the credit's downgrade to junk becoming a headache.

That also fostered a revival in the euro, sending the

dollar

down 0.3% against a basket of currencies and improving the competiveness of dollar-denominated assets such as commodities as exports.

And, indeed,

copper

hit a three month high, while

oil

enjoyed strong gains, particularly Brent crude, which stood 4.3% higher at 118.25 cents a pound in late deals.

Brazil downgrade?

So there were these influences do deal with even before getting to crop-specific issues, which for sugar meant next week's expected downgrade to industry estimates for the cane crop in Brazil's Centre South region – the biggest producing area of the top producing country.

London white sugar for August jumped 6.1% to a five-month closing high of $814.80 a tonne, while New York raw sugar gained 6.7% finish at 29.52 cents a pound for October delivery.

And for

corn

, it was back to the argument about just how much did China buy on the break.

The US Department of Agriculture through its daily reporting system (weekly export sales are out on Friday this time) revealed a sale of 540,000 tonnes of American corn to China, the first confirmed on the current break.

An extra 300,000 tonnes was announced to "unknown destinations", believed to be Chinese.

'One hell of a ride'

Rather than disappointing traders, who have been talking far bigger numbers, the confirmation lifted estimates even further.

"Numbers are now circulating as high as 7m tonnes," Darrell Holaday at Country Futures said. (Actually, some observers were talking that high on Wednesday.)

But Matthew Pierce at PitGuru succeeded in upping the stakes: "If some analysts are correct and I don't want to fade them, China has actually bought over 10m tonnes of corn for new crop delivery that will be reported over the next couple months.

"If true we are in for one hell of a ride this season."

'Not a bullish signal'

There was quite a voyage on Thursday for investors in the soon-to-expire July lot, which stood 3% higher at one stage before closing $6.50 a bushel, up a mere 0.2% on the day. And this despite another day without any deliveries against the lot, signalling sellers are getting better prices on cash markets.

The better-traded September lot gained 1.0% to 6.25 a bushel at the close with the new crop December lot adding 1.2% to $6.15 ½ a bushel.

"We have continued to see liquidation in the July contract in comparison to the December since the strong gains on Tuesday. This is not a bullish signal," Mr Holaday said.

Selling of near-term lots is in favour of later-term ones is, after all, called bear spreading.

Split wheats

For

wheat

, Russia was a key issue, after winning a clean sweep of 180,000 tonnes at the latest Egyptian grain tender, and reminding other exporters just how far out of the money their shipments are. More than $30 a tonne in Europe's case.

Indeed, it was contracts in Europe, Russia's nearer neighbour, which felt most of the heat. Paris wheat for November dropped 2.1% to E190.50 a tonne, while London's November contract fell 0.9% to £161.65 a tonne.

European contracts also had to deal with data showing bumper wheat imports, of 780,000 tonnes, fuelled by the ditching of duties.

The contracts' performance was even worse than that of Kansas wheat, which lost 0.7% lower by the close, to $7.03 ½ a bushel, for the July contract, after the expiring lot received a stack of requests for delivery. The September contract fell 0.3% to $7.24 a bushel.

Chicago wheat actually did pretty well, adding 1.2% to $6.34 ½ a bushel for the best-traded September contract, doing a better job of finding support in a 5% cut by the Buenos Aires Grains Exchange to its forecast for Argentine wheat sowings for 2011-12.

'Significant technical buying'

As for

soybeans

, they continued their gentle move higher, adding 1.4 to $13.40 ¾ a bushel for August and 1.3% to $13.37 ¾ a bushel for the new crop November lot.

"Significant technical buying occurred when November soybeans moved through the 13 ¼-a-bushel area as it broke through the downtrend resistance," Mr Holaday said.

Some analysts also mentioned fears for hot weather on way.

"Weather this morning is still watching a high pressure ridge in the six-to-10 day outlook which could bring warm/dry temperatures," US Commodities said.

The broker added that "continued heat in the plains and Texas areas are causing some discomfort over yield potential" there, a big factor for

cotton

too, which edged 0.1% higher to 113.52 cents a pound for December delivery.

By Agrimoney.com

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