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Evening markets: profit-taking sinks crops, except coffee

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Corn

managed, just, to escape the selling pressure. On an old-crop basis, at least.

But new-crop corn, and other grains, succumbed to profit-taking, leaving coffee as the bastion of bulls on Tuesday, nearly getting back to $3 a pound in New York.

Macro-economic factors held a few concerns, with many investors cautious ahead of a news conference by Ben Bernanke, the head of the US Federal Reserve, on Wednesday, the first scheduled briefing with reporters in the central bank's 97-year history.

The conference comes at a crucial time, what, with investors wondering how long the so-called QE2 round of easy US monetary policy will last.

'Commodity fever is cooling'

While share markets had a strong results from Ford, 3M and UPS to keep them ahead, commodities had, some believe, a lowering in their investor prominence to deal with, if tighter monetary policy means slower demand for raw materials, and so on.

"The bottom line is that the commodity fever is cooling," US Commodities said.

Whatever that talk which marked Monday's trading, of a potential switch from dollar cash to commodities such as grains, it was absent in this session.

Outside markets had less of an influence, leaving grains to trade closer their "individual fundamentals", Darrell Holaday at Country Futures said.

Ethanol data

For old-crop corn, that means a look ahead to US ethanol production data on Wednesday which many expect to come in firmer than last week's which caused a sharp sell-off in the grain.

"The corn market will be watching the weekly ethanol production report very closely. We really don't see any back-off in ethanol production," Mr Holaday said.

Corn for July added 0.6% to $7.72 ¾ a bushel.

East vs west

However, the new crop December lot had the setback of potentially drier weather creeping into the outlook for US areas struggling to plant in swampy conditions.

"Portions of the upper Plains and the northern half of the western Corn Belt could see less than 0.5 inches of total rain between the days of May 1-7," WxRisk.com said.

US Commodities added: "It is the eastern Corn Belt that will struggle the most."

The December contract fell 0.8% to $6.75 ¾ a bushel.

'Varying and unsatisfactory crop'

Weaker corn ironically helped new crop November

soybeans

close well above their low of the day, if ending down 0.6% at $13.74 ¾ a bushel.

Better prospects for corn sowings mean less likelihood of farmers switching to soybeans, which are later sown.

The oilseed was also helped by a report from Oil World that Argentina's soybean crop would come in at 49m tonnes, below the South American country's official forecast of 50.4m tonnes, warning that "crop conditions of later-planted soybeans are varying and unsatisfactory in many locations".

Still, soybeans felt pressure from Canadian data showing farmers intend to sow a record 19.2m acres with rapeseed, above earlier estimates and at the top end of market forecasts, although of course wet fields could upset farmers' plans here too.

'Rather lacklustre'

As for

wheat

, it too on a generally negative day proved unable to hold onto two-month highs in Chicago, ending down 1.8% at $8.11 ¼ a bushel for May and 1.7% lower at $8.47 a bushel for July delivery.

Canadian estimates for overall wheat sowings were, at 24.7m acres, at the top end of market forecasts too. And Morocco declared an end to wheat imports for now, although this was not a complete surprise.

"The day looks rather lacklustre to tell the truth," Matthew Pierce at PitGuru said, with prices having already run up ahead of the poor US wheat crop condition data out last night.

Kansas hard red winter wheat for July lost 1.1% to $9.60 ¾ a bushel while European contracts ended higher, but only by virtue of being closed on Monday, when US lots made strong gains.

Paris wheat for May ended up 0.5% at E253.50 a tonne, while London wheat for May closed 1.0% up at E212.00 a tonne.

'Lack of selling'

Among softs, New York's July

cotton

contract continued its fall, blamed on signs of demand destruction evident in, for example, cancellations of US exports shown in weekly shipment data.

The lot, which stood near 200 cents a pound a month ago, tumbled 3.6% to 160.39 cents a pound, the weakest finish for a nearest-but-one contract since late January.

However, New York

coffee

added 1.9% for July delivery to finish at 296.30 cents a pound, on a mixture of commercial and fund buying.

"The move up isn't on big volume, but rather a lack of selling," The Jurgens Bauer at PitGuru said, highlighting how the upswing in prices from early lows had coincided with the opening of the options market, a dynamic whose significance might yet become apparent.

By Agrimoney.com

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