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Evening markets: wheat tightens its grip

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Wheat tightened its grip on Wednesday after strong US export data fuelled concerns supply sparked by a downbeat estimate of US winter crop production.

Wheat export sales soared 79%, week on week, to 255,000 tonnes in the last week of April, US official data showed, with Japan, Iran and Indonesia the top buyers. Nearly 132,000 tonnes of new crop wheat were sold as well.

The data added to concerns sparked by Informa Economics' report on Wednesday forecasting US winter wheat production at 1.54bn bushels this season compared with an official US estimate of 1.62bn.

Chicago wheat for May jumped 2.3% to $5.61 a bushel at 17:30 GMT, with some new crop contracts benefiting even more. September wheat added 2.4% to $5.99 ½ a bushel, with March 2010 gaining 2.9% $6.38 ½ a bushel.

Transatlantic trend

This pattern was repeated in Europe too, where London's May wheat added £1.75 to £115.00 a tonne, while most later contracts took on £2.00, and May 2010 soared £2.50 to $133.00 a tonne.

In Paris, May wheat stuck at E146.00 a tonne while November added E4.00 to E153.00 a tonne, with the May 2010 contract, again, performing best by leaping E4.50 to E157.50 a tonne.

Paris rapeseed struggled to keep up with that, despite its rediscovering its mojo in recent days, helped by strong performances by its vegetable oil comrades, palm oil and soybeans.

Still, rapeseed just about managed, in euro terms, rising E4.75 to E320.25 a tonne for August. February 2010 did best, up E5.00 to E330.50 a tonne.

China crisis?

Indeed, rapeseed, for once, left soybeans in the shade. Beans were not helped by more modest export sales numbers, down 22% week on week to 654,000 tonnes, prompting traders to wonder whether the old crop beans' premium on over new crop had been overdone. Typically, it is further ahead contracts which get the premium.

Indeed, a rumour swept the floor that China had deferred 500,000 tonnes of bean purchases into the next crop year, which starts in September. A second leg to the rumour talked of 300,000 tonnes of bean purchases being cancelled.

Chicago's May beans lost 5 cents to $11.30 a bushel, with July off 12.75 cents at $11.05 ½ a bushel. More distant contracts did better, for example January 2010 down 1.5 cents at $9.79 a bushel, protected somewhat by the closing of the discount.

Corn, meanwhile, felt some benefit from rising oil prices, as a major feedstock of alternative energy source, ethanol.

May corn added 4.25 cents to $4.05 a bushel, with forward contracts making similar gains.

Pigs back in the hoghouse

Rising oil also helped sugar, another source of ethanol, and where the market is also being squeezed by a poor crop in India, the commodity's biggest consumer.

London's white sugar for August inched $0.60 higher to $450.00 a tonne, a fresh high since July 2006, and taking gains on the benchmark sugar contract this year near to 42%.

Still, cocoa fared better, adding 3.6% to $2,452 a tonne in New York for July delivery, helped by a feeling that it had been left out of recent commodities rallies.

Pigs, however, were back in the hoghouse as traders wondered whether Wednesday's rally had been overdone. June hogs slipped 0.4 cents to 66.70 cents a pound, with their July partners off $0.95 cents at 69.15 cents a pound.

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