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Evening markets: sugar soars while wheat dives

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A host of headwinds sent food commodities backwards on Thursday, with a 4% fall in wheat leading the decline.

Weather was blamed for a big chunk of the weakness in Chicago crops. Any thoughts of the MidWest getting too much heat for, crops', comfort has gone out of the window with talk of rain too.

"The heat isn't expected to last more than a few days at most and more beneficial rain is predicted early next week over much of the belt," Vic Lespinasse, the GrainAnalyst.com analyst, said.

"This is a very favourable weather outlook." From a farmer's, or bear's, point of view, that is.

Egyptian snub

But there were other niggling concerns too. Such as a bounce in the dollar, blamed on jitters ahead of US unemployment data, which made American exports, including commodities, less affordable.

Indeed, Egypt bought 180,000 tonnes of French wheat, 30,000 tonnes of Russian wheat earlier on Thursday, but no American wheat.

Shares were a touch weaker too, as was oil, an important influence on the prices of crops often used as biofuels.

Brazil data

Wheat's setbacks also included news of a raised official estimate of Brazilian production in 2008-09 to 5.85m tonnes from 5.67m tonnes.

That was not a huge figure, but when investors were looking for reasons to sell, any snippet helped.

Chicago's benchmark September wheat contract was 21.5 cents down at $5.07 � a bushel at 17:00 GMT, within 15 cents of its 2009 low, with forward contracts showing similar losses.

Mixed weather

Conab, part of Brazil's agriculture ministry, raised forecasts for the country's corn crop too, from 49.5m tonnes to 50.3m tonnes.

Again, that was not a huge change in the scheme of world production, but did its bit to help September corn shed 12.25 cents to $3.34 � a bushel.

Losses in soybeans were limited in part by a forecast that parched parts of Minnesota and Iowa might not get as much rain as had been thought, potentially putting some pressure on bean crops during the crucial podsetting phase.

August beans dipped 8.25 cents to $11.66 � a bushel, although new crop November beans were less resilient, falling 16.5 cents to $10.28 � a bushel.

Sugar, sugar

Among softs, sugar grabbed the headlines again after setting a fresh all-time high in London of $521.8 a tonne (or, at least, the highest since the contract first started running in the 1980s).

The finish of $518.9 a tonne, up $8.3 on the day, was a record for a closing price too.

In New York, where sugar has a longer trading history, raw sugar for October hit 19.83 cents a pound at one point � beating a 2006 peak to hit its highest since 1981 � before giving up some ground to stand up 0.36 cents at 19.73 cents a pound.

Sugar continues to be boosted by expectations of buoyant Indian imports and sagging Brazilian exports, with talk of stronger Mexican demand chipping in on Thursday too.

By Agrimoney.com

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