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Evening markets: rumour, fact, China mix fells corn again

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Corn

is not in investors' good books.

If the grain could not please investors on Friday, when a huge, 1.25m-tonne sale (including 250,000 tonnes for 2011-12) of US corn to China was near-confirmed, yet prices still fell, it was hardly going to do so on Monday, when there was no such action.

The market had expected some. "Rumours continued over the weekend that more Chinese corn purchase announcements will be released," and as early as today, US Commodities said.

And it is further sales which could prove the real market mover, given that the US Department of Agriculture has already accounted for 1m tonnes of China corn.

"Thus the 1m tonnes old crop purchase on Friday was in line," US Commodities said.

"If China purchases additional old corn, it will help to alter the balance table."

'Probably disappointed'

As it was, there was no further announcement of US sales.

The market "is probably disappointed that it did not get any additional China corn news this morning", Darrell Holaday at Country Futures said,

In fact, the market did. China said it was to sell some of its vast wheat reserves as animal feed, a move which could ease pressure for corn imports. The first 300,000 tonnes of wheat will be sold off on Tuesday.

Chicago's May corn contract dropped 2.7% to $6.71 a bushel by the close, with the December contract shedding 2.1% to $5.97 a bushel, at pretty much its day low.

More dryness

Nor did

wheat

do much better, despite continuing concerns for the lack of moisture for the US hard red winter crop.

"The south Plains dry area remains a concern," US Commodities said.

"In the one-to-five day forecast, only 35% of the area will see 0.25-1 inch of [rain] relief. About 50% of the hard red winter wheat area will have a problem."

The lack of moisture facing European Union crops made it to Chicago consciousness too, with Benson Quinn Commodities noting that "portions of the EU have started to turn dry".

'Nervous market'

Still, May wheat was 1.1% lower at $7.25 ¼ a bushel, with investors continuing to focus on the prospect of US acreage and stocks data due out on Thursday, in an eagerly-anticipated set of briefings from the USDA.

"It is a nervous market ahead of Thursday's reports," Mr Holaday said, viewing the stocks data as actually the more crucial.

"Acreage intentions are just projections that will be debated for many weeks. But the stocks number is a critical number."

Consumption vital statistics "clearly show that there has not been a drop off in consumption. Even Friday's [US] Hog & Pig report numbers were larger than anticipated".

Low sowings?

Nonetheless, it was acreage data which were viewed as helping

soybeans

do relatively well, shedding 0.7% to $13.47 a bushel for May, and 0.6% to $13.42 a bushel for the new crop November lot.

Sure US demand is looking shakey. "The soybean crush margin is poor enough that Galesburg is expected to take downtime," US Commodities said.

And Brazil has progressed above the half-way mark in its rain-delayed harvest, reaching 56% done.

But the "soybean market is keying off potential for bullish acreage numbers in Thursday's report, with some private analysts pegging planted acres as low as 75.3m acres compared to 77.4m acres last year", Benson Quinn said.

Limit down

Soybeans' firm performance came in sharp contrast with weakness from the other great Chinese agricultural import,

cotton

, which fell the maximum daily limit in New York, of 7.0 cents, to 197.49 cents a pound for May delivery.

A negative influence from a weak overnight performance on China's Zhengzhou exchange was compounded by data showing Indian farmers could raise acres by 15% in 2011-12.

And

sugar

prices were depressed by the start to Brazil's harvest, with 30 sugar ethanol mills underway, according to an industry report.

New York sugar for May slid 2.9% to finish at 27.05 cents a pound, while in London, May white sugar lost 1.4% to finish at $701.60 a tonne.

By Agrimoney.com

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