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Evening markets: oil helps grains to late surge

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Chicago grains looked for a positive end to a difficult week, helped by waning concerns about China's crop sales and upbeat US house market data.

Statistics showing US housing starts up 3.6% last month, better than analysts had forecast, raised hopes for the global economic revival and helped crude oil shrug off early blues.

New York crude for August was 2.4% higher at $63.51 at 16:15 GMT.

Follow the leader

Chicago crops, this time, appeared to follow the script saying that, as biofuel feedstocks, oil prices should be a major influence.

August soybeans soared 3.2% to $10.07 ¼ a bushel, with September corn recovering from a 2009 low of $3.16 bushel to stand at $3.19 ¾ a bushel, up 1.0% on the day.

Wheat jumped 2.5% to $5.46 ¾ a bushel, taking its rebound from last week's 2009 low to 13.0%.

'More fund buying'

Not that all analysts agreed that oil was the only trigger point for the rally.

Some said the market had come to terms with China's auction of 500,000 tonnes of soybeans, 1.2m tonnes of corn and 750,000 tonnes of wheat from state reserves next week, and saw it as of modest significance.

Others mentioned technical factors, with rising prices triggering automatic buy orders which in turn lifted the market further.

"More fund and local buying has been seen in all pits, touching off some commission house buying on stops as new highs were hit across the floor," Vic Lespinasse, GrainAnalyst.com analyst, said.

"Despite the increasingly impressive gains, volume remains on the light side, making it easier to move the market."

Bad dynamics

No such luck was had in Europe, where prices remained moderate to weak.

London wheat for November dipped £0.50 to £112.00 a tonne, with Paris contracts mixed. November wheat added E0.25 to E143.75 a tonne, but May 2010 lost E1.00 to E147.75 a tonne.

The movements follows a difficult week in Europe, where Strategie Grains, the analysis group, raised forecasts for wheat volumes, but raised concerns over quality.

"The problem is that just as demand for wheat in animal feed is reduced, the supply of wheat only good enough for feeding increases," Hugh Schryver at Glencore said.

Cocoa sweetens

Among softs, cocoa had separate reasons for rallying – data showing North American cocoa grinds at 105,100 tonnes in the second quarter, down 6.8% year on year.

Traders had expected a drop of 10-11%.

New York cocoa for September soared 3.0% to $2,757 a tonne, with its London counterpart ending up 3.9% at £1,773 a tonne.

For coffee, fund buying was credited for a 2.9% rise to $1,454 a tonne in London September robusta prices, the eighth successive positive close.

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