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Evening markets: soybean lot fades as expiry nears

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Soybeans turned south again, dropping below $11 a bushel for the first time in two months, thanks to the technical factor of a forthcoming contract expiry, and the pressing matter of crumbling external markets.

Stocks were lower, ahead of second-quarter results from Alcoa, the US aluminium giant, which investors expect to set the tone for the rest of Wall Street's quarterly earnings season.

The dollar strengthened against most major currency bar the yen, which soared 2.5% against the greenback, as investors sought sanctuary in the US – and Japan - the from growing fears for the economic revival.

Against the euro, the dollar firmed 0.6% to $1.3840. A stronger dollar is typically bad news for currencies traded in dollars, making them more expensive to foreign buyers.

Oil slides

But that was only one of the reasons stacked against oil, which also faced headwinds of a report from Opec, the producers' cartel, predicting that global demand for crude would not recover to 2008 levels until 2013.

Plus there was a US government report showing petrol stocks had risen by 1.9m barrels in the last week. Analysts had expected a 600,000 barrel increase.

"It looked like gasoline demand had started to get better and now suddenly looks bad," Tony Nunan, risk manager at Mitsubishi Corp in Tokyo, told Reuters, the news agency.

"It could be a price response or it could just be that the economy is just not out of the woods yet."

New York crude for August stood 3.3% lower at $60.88 a barrel at 17:30 GMT.

'Lot of liquidation'

And where oil goes, food commodities often follow, being major feedstocks for alternative energy sources.

Chicago soybeans were certainly punished, shedding 42.75 cents, or 3.8%, to 10.90 ¾ a bushel for July – after touching a nine-week low of $10.87 a bushel.

Closure of long positions ahead of the contract's expiry on July 14 did not help.

"You're seeing a lot of liquidation," Citigroup analyst Mario Balletto said.

Indeed, forward contracts did better. While the best-traded August lot dipped 28 cents to $10.25 ½ a bushel, November beans were only 1.75 cents lower at $8.39 ¾ a bushel.

Grains escape

Corn and wheat were spared a severe sell-off too. July corn was 3.5 cents higher at $3.39 a bushel , with new crop contracts a touch weaker. December, for instance, lost 2.75 cents to $3.33 a bushel.

Wheat was on a plane of its own, gaining across the range, with the July contract up 3.25 cents at $4.88 a bushel and September, the most traded lot, adding 5 cents to $5.17 ½ a bushel.

European wheats were a touch higher too, with Paris's August contract added E0.25 to E133.50 a tonne, and London's November lot up £0.25 at £112.00 a tonne.

August rapeseed was not so lucky, dragged lower by soybeans, its vegetable oil comrade. Paris's August lot ended down E3.25 at E273.00 a tonne, its lowest for three months.

Juice falls back

Soft commodities were generally lower, although cocoa bucked the trend, adding 2.3% to $2,524 a tonne for New York's benchmark September contract.

Its London equivalent did even better, helped by the weaker pound, adding 3.4% to £1,663 a tonne.

Orange juice, however, continued to slip back to earth after its near-9% spike on Monday, caused by a large speculative buyer.

New York's September contract lost 4.2% to 84.70 cents a pound.

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