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Evening markets; wheat weighs on grains, amid US rain hopes

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Wheat

took the blame.

After having a solid morning session, rising 2% nearly to regain $6.40 a bushel in Chicago for December delivery, the grain had a downbeat live trading session.

The lot ended down 1.5% at $6.16 a bushel, at pretty much its low for the day.

And that weighed on its peers too.

Corn

, having also posted 2% gains, closed unchanged at $6.05 ½ a bushel for December.

Soybeans

for November eased 0.1% to $11.63 ¾ a bushel.

Copper shines

And it wasn't as if investors could blame external markets.

Shares

extended gains, closing up 3.7% in London and standing up 1.1% in New York in late deals, gaining further tonic from ideas that Europe may be getting on top of its debt, and potential banking, crisis.

The

dollar

dipped 0.4%, improving the affordability of dollar-denominated exports, such as many commodities.

Indeed. Brent crude

gained

2.7% to regain $105 a barrel, while London

copper

soared nearly 6% to $7,225 a tonne - its best performance since February last year.

The average commodity saw fit to gain 2.0%, according to the CRB index.

Rain where it is needed

But not wheat, whose weakness was blamed largely on better hopes for rain in the US South, improving sowing conditions for winter grains in drought-stricken states.

"The hard red winter wheat area is expected to receive 0.5-2.5 inches of rain over a large proportion of the wheat area, 70%," US Commodities said.

Darrell Holaday at Country Futures said: "Optimism is growing regarding rainfall for a large part of the hard red winter wheat area this weekend. That is capping any strength in wheat."

Not that this looked the only reason, with hard red winter wheat itself, as traded in Kansas, closing a modest 0.3% lower at $6.97 ¾ a bushel for December delivery.

Upgrades

Other reasons cited for the weakness included upgrades to wheat estimates by the likes of Coceral, a European industry group, and the United Nations Food and Agriculture Organisation, although these were hardly a surprise.

The FAO also issued thoughts on resilient world wheat sowing prospects.

Furthermore, US export sales, at 432,000 tonnes, were towards the bottom end of market expectations when analysts had grown increasingly optimistic over prospects, with low prices seen stimulating demand.

Exports soar

Corn's export data, at 1.2m tonnes, were less disappointing.

Indeed, they were "significantly above expectations and the highest number since March 24," Mr Holaday said.

"This is what happens when you get a break in price."

And, coupled with firmer ethanol production data on Wednesday, showing corn use in making the biofuel up 2.3m bushels at 91.8m bushels, according to US Commodities, the demand picture began to look more complete.

"Ethanol production did pick up this last week. Plants have been taking down time and will be coming back on line," the broker said.

'Definitely a mixed bag'

Still, corn still faces some pressure from the ongoing US harvest, even if ideas of yields are not all going bears' way.

"We are hearing mixed reports on actual corn yields," Paragon Economics and Steiner Consulting said in a report.

"Much of the talk in Iowa is that yields are better than expected but much of what we hear from east of the Mississippi River is that yields are disappointing.

"It is definitely a mixed bag reflecting, in general, the dry conditions seen since July 1. It all depends on whether you caught one or more of those scattered showers in July and August."

'Storage issues'

Soybeans, however, continue to feel the greatest harvest pressure, in part because of the speed of the harvest, which is being assisted by fine Midwest weather.

"The soybean harvest has advanced rapidly and there are soybean storage issues surfacing," Mr Holaday said.

"That is pressuring the soybean basis in the western growing regions," with farmers short of silo space forced to sell.

"The harvest has simply come too fast."

Vietnam issues?

Soft commodities generally made a better fist of catching the broader market tailwinds, with arabica

coffee

for December soaring 2.9% to 234.40 cents a pound in New York.

London's December robusta contract added 1.8% to $2,025 a tonne.

Signs of end user buying, by the likes of Indonesia, was seen as part of the reason for the rise, but also ideas that supplies from Vietnam, the top robusta producer, may not be so forthcoming after all.

Jurgens Bauer at PitGuru noted talk that "Vietnam cannot deliver on the contract sales of coffee".

'Low activity'

However, New York raw

sugar

dropped 0.7% to 24.64 cents a pound for March delivery, on a somewhat lacklustre day.

"We feel the sugar market is locked within a 24.00-25.50 cents-a-pound range for the time being," Nick Penney at Sucden Financial said.

"There has been low activity by funds who have for the large part exited sugar.

"Hedgers have been inactive so this explains the low volumes. End users may have priced what they needed to in the recent drop and may be waiting for new lower levels to act."

By Agrimoney.com

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