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Evening markets:grain futures swamped by extra corn supplies

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Market bears, who have already raked their claws aplenty through agricultural commodities this month, saved a large swipe for the last day.

They gained extra fortification from a broadly negative macro-market environment, with renewed fears over the eurozone outweighing better-than-expected results from the US from a Chicago factory survey, and a University of Michigan consumer sentiment report.

Wall Street

stocks

traded 1.4% lower in day deals, while the

dollar

added 0.7%, making matters even more toxic for dollar-denominated assets including many commodities by making them less competitive to buyers in other currencies.

Copper

dropped nearly 3% in New York, taking its losses for the July-to-September quarter nearly to 25%, the metal's worst performance since the last three of months of 2008, during the post-Lehman crisis.

'Substantial blow'

But knocking grain futures down was anyway as easy as falling out of bed after the US Department of Agriculture discovered an extra 200m bushels of

corn

in domestic silos, in a quarterly stocks report.

Grain prices at close on Friday

Chicago wheat: $6.09 ¼ a bushel, -6.9%

Chicago corn: $5.92 ½ a bushel, -6.3%

Chicago soybns: $11.79 a bushel, -4.2%

Paris wheat: E183.50 a tonne, -3.8%

London wheat: £150.65 a tonne, -3.7%

Prices for near-term contracts

"Today's USDA grain stocks report was bearish for the entire grains and oilseeds complex," Rabobank said.

"The USDA delivered a substantial blow to grain market bulls today by providing significantly higher corn stock estimates than expected."

'Shut bulls down'

At GrainAnalyst, trader Matthew Pierce was more colourful.

"The overall report was ragingly bearish. The USDA simply shut bulls down today," he said.

Corn for December spent most, if not quite all, the live trading session down the exchange limit of $0.40 a bushel, equivalent to 6.3%. Indeed, the lot ended there, at $5.92 ½ a bushel, the lowest finish since December.

And that sent other grains down too, including

wheat

, which ended down 6.9% at $6.09 ¼ a bushel in Chicago for December delivery and in Europe significantly lower too.

Paris wheat for November ended down 3.8% at E183.50 a tonne, the lowest for a spot contract since July last year in the early days of the grains rally.

London wheat for November closed 3.7% lower at an 11-month low of £150.65 a tonne.

Chicago

soybeans

were also dragged to an 11-month low, down 4.2% at $11.79 a bushel, despite their stocks data being, on the face of it, mildly bullish, coming in 10m bushels below expectations.

Seasonal bottom?

Still, just when it may have looked that it was all over for bulls, Minneapolis hard red spring wheat provided some hope, reviving back into positive territory not long before the end of play before dipping back to end down 0.4% at $8.92 ¼ a bushel.

USDA crop stocks estimates, change on last, (and on market forecast)

Corn: 1.128bn bushels, +208m bushels, (+166m bushels)

Soybeans: 215m bushels, -10m bushels, (-10m bushels)

Wheat: 2.15bn bushels, n/a, (+104m bushels)

US stocks data as of September 1

And analysts made some positive noises too, with Mr Pierce noting hope for prices rebounding, especially factoring in dry South American conditions.

"At the last four quarter ends things have bottomed before making new highs. I feel there is no reason things cannot bounce significantly once this flushout is over," he said.

At Country Futures, Darrell Holaday said: "This may be the bad news that puts in a seasonal bottom in price."

'Raining on parades'

The weakness spilled over into other agricultural markets too, with cotton for December ending down 2.0% at 100.19 cents a pound.

The USDA data was "raining on a lot of parades today", Louisiana-based cotton analyst Mike Stevens said.

"Yesterdays excellent performance in cotton now seems for naught, dropping our market back into the range either side of 100 cents a pound we had been in the previous six sessions."

By Agrimoney.com

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