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Evening markets: weaker dollar helps crops revive

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Crops staged some semblance of a recovery, helped by a declining dollar as investors' continued their push into riskier investments.

The dollar touched new 2009 lows against major currencies, with the euro briefly touching a new high for the year of $1.46.

Besides making dollar-denominated exports look cheaper to foreign investors, the greenback's slide was symptomatic of investors' growing willingness to flee the safety of Treasury bonds for riskier assets, including shares. London's FTSE 100 index closed above 5,000 points for the first time since October.

They are also recovering their appetite for many commodities, with oil adding 1.7% to Tuesday's strong gains at 17:00 GMT, taking New York October crude to $72.33 a barrel.

'Traders wary'

While crops' fundamentals for crops look poor at present, the improved external sentiment persuaded some investors to draw in their horns, especially with the prospect of a key US Department of Agriculture crops report on Friday.

"Many traders are wary of getting heavily short ahead of the USDA report Friday and they have covered some of their short positions or at least quit selling for now, enabling prices to firm up to slightly higher levels in most pits," Vic Lespinasse, the GrainAnalyst.com analyst, said.

A cut by the Buenos Aires Grain Exchange to its Argentine corn planting forecast also did its bit. The exchance pegged sowings at 1.875m hectares, compared with 2.0m hectares in its report last week.

Corn for December stood 1.25 cents higher at $3.08 ¾ a bushel, with the thinly-traded September contract up 2.5 cents at $3.05 ¼ a bushel.

Wheat recovery

Wheat for December was 1.5 cents lower, at $4.56 ½ a bushel, setting course for its sixth successive negative close, but was at least above the two-year low (for a nearest-but-one contract) of $4.52 ¾ a bushel reached earlier.

September wheat was actually 3.25 cents higher at $4.34 ¾ a bushel, albeit in thin volumes.

Even European wheat contracts picked themselves up, although again not before hitting fresh lows, with London's November lot closing £0.75 down at £92.25 a tonne and the Paris November contract down E1.50 at E121.50.

It was soybeans' turn to take the rear although, again, the crop remained well above intraday lows. November beans were 4 cents lower at $9.32 ½ a bushel with the September contract down 5 cents at $9.64 a bushel.

Rain on cane

No such troubles beset cocoa, which hit a 14-month contract high in New York, boosted by fund buying.

The weaker dollar, and a report cutting hopes for Ghana's crop were credited with helping the rise.

December cocoa hit $3,046 a tonne before retiring to $3,029 a tonne, up 2.6% on the day. London cocoa closed up 2.2% at £1,898 a tonne.

However, sugar was robust, helped by a report from Brazilian crushers that rains had continued to hamper operations.

"The strong rains in the main centre-south cane growing region caused a drop of 23% in crushing in the second half of August compared with the two weeks prior," Brazil's Sugar Cane Industry Association, Unica, said.

New York raw sugar for October was 0.27 cents higher at 21.14 cents a pound, with London's October contract closing down $0.50 at $519.50 a tonne.

By Agrimoney.com

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