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Evening markets: strong export data fosters corn recovery

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An about turn in macro-economic sentiment, founded on strong US jobs data, laid the groundwork for an improvement in agricultural commodities, after a weak start.

And

corn

proved one of the best at grasping the opportunity - backed by a strong US weekly export sales data.

The world's top producer of the grain sold 1.01m tonnes in the latest week, well ahead of the 550-750,000 tonnes that the market expected.

"The corn market has been dragged lower all week on 'weak' demand. But today's weekly export sales say differently," Benson Quinn Commodities said.

"Corn sales were over 1.0m tonnes for only the fifth time this marketing year and well exceeding trade estimates."

Premium rebuilds

Chicago's March corn lot stood 0.9% higher at $6.32 ½ a bushel heading into closing deals, rebuilding a premium over March

wheat

whose export sales data were less impressive.

They came in at 420,000 tonnes, a little below market hopes, which might have been expected to have a more dramatic reaction had the US not achieved some export success on the day.

The country secured, at 180,000 tonnes, its biggest order from Egypt, the top wheat importer for more than year, and the second in a week, beating off rivalry from French supplies.

Argentine, Australian and former Soviet Union supplies were nowhere to be seen.

Chicago's March wheat lot stood 0.2% lower at $6.25 a bushel –intriguingly, losing ground on Kansas wheat too. (And it was soft red winter wheat, the type traded in Chicago, which Egypt bought.)

Kansas hard red winter wheat for March was 0.5% higher at $6.73 ½ a bushel.

'Very disappointing'

US

soybean

export sales were the most downbeat of the lot, at 436,000 tonnes, compared with market hopes of at least 650,000 tonnes, and a result termed by Darrell Holaday at Country Futures as "very disappointing".

And the oilseed, ironically, came under heavy selling too after China was reported to have signed agreements to buy 12m tonnes from the US.

"The market is getting a 'buy the rumour, sell the fact' trade from the Chinese soybean purchase," US Commodities said.

At rival broker Allendale, Paul Georgy said: "This is a record purchase but in line with trade estimates."

Nonetheless, investors appeared reluctant to go too short of the oilseed, with South American weather still touch and go.

"If next week's rain misses south Brazil, more talk of production below 70m tonnes will occur," US Commodities said.

Soybeans recovered some 14 cents from an intraday low to stand flat at $12.61 a bushel.

Firmer softs

The more positive feeling supported many soft commodities too, bringing losses in New York March

cotton

back to just 0.03 cents% as the lot recovered to 92.47 cents a pound.

The May contract made it, just, back into positive territory, up 0.13 cents at 93.61 cents a pound.

And New York raw

sugar

for March was 0.3% higher at 24.56 cents a pound in closing deals, with the May lot up 0.6% at 23.73 cents a pound.

'Fantastically squeezed'

But New York arabica

coffee

remained in its downswing, falling 0.5% to 199.30 cents a pound for March, the first close for a spot contract beneath 200 cents a pound since November 2010, and despite support from Commerzbank.

"The price has now fallen 8% since the beginning of the month. It is clearly being influenced by expectations of a good harvest in Brazil, due to start in April," the bank said.

"In view of the currently tight supply in the wake of the disappointing harvest in Colombia, we believe the price slump to be exaggerated and anticipate a recovery in the near future."

It was London robusta coffee which gained on Thursday, adding 1.4% to $2,167 a tonne, amid growing talk of a large position putting pressure on shorts – and this, ironically, the day that NYSE Liffee, which operates the London exchange, unveiled proposals for position limits.

"The front month is presently being fantastically squeezed and the authorities are now setting delivery limits across the Softs in order to curtail these events in the future," Thomas Kujawa at Sucden Financial said.

By Agrimoney.com

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