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Evening markets: vomitoxin talk boosts soymeal

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Rumours of vomitoxin contamination in corn sent shockwaves through Chicago trading patterns on Thursday, sending soybeans, and in particular soymeal, jumping.

Concerns for the quality of the US corn crop, after being left by rain-delayed harvest to stand in sodden fields, exploded into widespread talk of findings of significant levels of vomitoxin, a byproduct of certain fungal outbreaks which renders the crop unfit for even animal consumption.

Corn lost early gains to close down 3.5 cents at $3.90 ½ a bushel for December delivery, fluffing a chance to get back above the $4 a bushel mark.

Alternative feeds

However, corn's loss was soybeans' gain. November soybeans closed up 18.5 cents at $9.82 ¼ a bushel on their penultimate day of trading. The contract expires on Friday.

The better-traded January lot ended up 18 cents, or 1.9%, at $9.90 a bushel, whiled soymeal did even better, soaring 4.1% to 301.00 a short ton.

Soymeal would benefit hugely in demand as a feed from a vomitoxin scare, which stands to tarnish both corn and distiller's grains, a byproduct of corn-ethanol production fed to livestock .

Wheat, long in the silo in the US, might see some benefit too, although Chicago's December contract lost early gains to close flat at $5.31 ¾ a bushel, hurt by Egypt's rejection once again of American wheat at tender in favour of Russian grain.

Meanwhile, Europe's favourite homegrown oilseed , rapeseed was helped to a fine performance, adding E3.25 to E273.00 a tonne in Paris, for February delivery.

About turn

Still, corn wasn't alone in feeling some vomitoxin pressure.

Soyoil closed a little lower too, as the scare caught out traders who had been playing a trade of short soymeal and long soyoil.

"Up until today there has been a lot of oil/meal spreading but today it is going the other way," Vic Lespinasse, the GrainAnalyst.com analyst, said.

"For example, Archer Daniels Midland bought 600 lots of December soymeal and sold 600 lots of December soyoil."

December soyoil ended unchanged at 38.27 cents a pound.

Surprise supplies

Beyond the reach of fungal rumour, stronger dollar kept a lid on prices of soft commodities

The euro fell by more than a cent to $1.4841 by 20:30 GMT, after Chinese and European policymakers warned over the fragility of the global economic recovery, reducing appetite for risk.

Wall Street shares fell too, as did oil, which stood more than 3% lower.

Cocoa was particularly badly off, with talk of decent supplies of new crop beans in West Africa also hurting sentiment.

March cocoa dropped 2.3% to $3,133 a tonne in New York and by 2.2% to £2,086 a tonne in London.

Talk of ample supplies of robusta coffee beans from Vietnam, the biggest producer, held back London coffee prices, which closed down 1.8% at $1,313 a tonne.

Sugar imports

However, sugar maintained some support from the deficit in India, the world's biggest consumer, which may have to import 8m tonnes in 2009-10, refiner Simbhaoli Sugars said.

Raw sugar for March closed up 0.02 cents at 22.69 cents a pound in New York, with December white sugar ending up $5.00 at $595.00 a tonne in London.

By Agrimoney.com

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