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Evening markets: soft commodities harden, but grains slide

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Softs were hard, and hards were soft in the agricultural commodities universe.

Grains set course for a poor finish in Chicago, pressed by factors including better Midwest weather and another negative surprise from Canada, in the form of bigger-than-expected stocks data.

But in New York, soft commodities most soft commodities put in a resilient performance, doing better at finding the tailwind provided by a barnstorming performance on external markets.

Wall Street

shares

were 2.1% higher in lunchtime deals, as the market for once saw the bright side, proving impressed by Australian economic growth data and German industrial production, besides Tuesday's upbeat US service sector statistics.

New York

oil

screaming 3.6% ahead to return above $89 a barrel, lifted by the general market mood, a weaker dollar (making it cheaper to buyers in other currencies) and fears for more storms to hit the Gulf of Mexico.

Maria follows Irene

This was a factor in

cotton's

limit-up performance too, with New York's December lot adding the maximum 4.0 cents allowed by the exchange to stand at 110.34 cents a pound in late deals.

"There is growing concern that tropical storm Maria could follow Irene's track," Mike Stevens, the veteran cotton trader, said, Irene being the hurricane which caused big damage to crops in North Carolina and especially Virginia.

Indeed, Virginia's crop has, thanks to Irene, gone from being 99% in "good" or "excellent" condition to 40%, US Department of Agriculture data show.

There is "continued growing talk of probable significant losses in the Pakistani crop" too, following unduly heavy monsoon rains, Mr Stevens added.

And that is before the strong technicals, with the fibre's refusal to give up the 100-cents mark for long impressing many investors.

Technical signal

Sugar

trapped some of the broad market tailwind, adding 0.3% to 28.37 cents a pound for October delivery as of 17:45 GMT.

Jurgens Bauer at PitGuru also noted that, in the last session, "good volume changed hands at the low end of yesterday's range, usually a sign of user buying".

And

coffee

went back on the offensive too, adding 1.2% to 284.35 cents a pound for New York's December arabica contract, although further headway may be more difficult.

"As traders approach the October option expiration on Friday, it seems doubtful that a push to new highs is likely, and rather expect a sideways market," Mr Bauer said.

Rains for soybeans

But grains found headway harder to come by in Chicago, in part because of rains which

soybeans

, in particular, need to fulfil yield hopes. (It is largely too late for corn.)

"The soybean sector has experienced more pressure than the other sectors because of some good rains that have moved through Minnesota, Iowa, Wisconsin, Michigan and some parts of the Illinois and Indiana," Darrell Holaday at Country Futures said.

"This will improve the soybeans in those areas and will finish off the beans that were not under stress."

Furthermore, Statistics Canada upgraded the size of last year's Canadian crop of rival oilseed canola by some 900,000 tonnes, which worked through into stocks as of the end of last month of 1.83m tonnes.

Traders had expected a figure of about 700,000-1.3m tonnes.

November soybeans were 0.3% lower at $14.17 ¾ a bushel with half an hour's trading or so to go.

'Exports has not been good'

Statistics Canada's

wheat

stocks figure was viewed a "bit negative" by broker US Commodites too, at 7.19m tonnes as of August 31.

Investors had expected a number in the range of 5.5m-6.8m tonnes.

Furthermore, Russia issued a reminder of its grip on world wheat exports, winning the bulk of the latest 300,000-tonne Egyptian order, while Kazakstan emerging as a contender to win 120,000 tonnes of the purchase,

No US wheat was even offered, at a time when, as Mr Holaday said, weak US grain cargo inspection data from Tuesday "continue to haunt this market as the export interest has not been good lately".

Chicago wheat for September was 1.1% lower at $7.52 a bushel.

'Crop is still dropping'

Corn

did better than that, with traders anticipating a downgrade to the official forecast for the US crop in the US Department of Agriculture's next key monthly Wasde report, due on Monday.

And such thoughts were only encouraged by data overnight showing a further deterioration in the health of the US crop.

"The trade has now dialled in lower yields and production, but the ratings continue to indicate the crop is still dropping," US Commodities said.

Furthermore, Cropcast came in with a crop forecast on the low side of the recent range, at 11.913bn bushels for output – 1bn bushels lower than the USDA figure – and 145.2 bushels per acre for yield.

Still, with many investors expressing some fatigue at the spate of analyst estimates in the run up to the Wasde, December corn dipped 0.7% to $7.50 ¾ a bushel.

By Agrimoney.com

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