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Grains get demob happy as Thanksgiving looms

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Crop prices gave bulls a Thanksgiving present, rising strongly ahead of what will be, for many investors, a four-day weekend.

The dollar helped set the tone for a positive, falling to a 15-month low against both a basket of currencies and the euro on US data showing consumer spending and home sales rising faster than expected last month, and jobless benefits falling.

Europe's single currency was trading at $1.532 at 19:45 GMT.

A cheaper dollar, which has ironically been encouraged by upbeat data as investors quit the safe haven of the greenback, makes US exports such as food commodities more competitive.

Soybeans struggle

But, running against the grain of history, as it were, it was soybeans which struggled most.

And this was besides US crush data for October a little ahead of expectations, at 163.1m bushels, with oil stocks lower than forecast at 2.73bn pounds.

The oilseed has something of a record of rising on both the day before and after Thanksgiving.

It almost broke the trend this time, standing 20 cents down at one point, before recovering to close at $10.54 ½ a bushel, up 8.5 cents on the day, for Chicago's January contract.

'Dramatic volatility'

That wasn't a patch on the grains, which closed sharply higher thanks to fund buying on a day when, with volumes light, even light trades moved markets.

Wheat for December ended 3.2% higher at $5.50 ¼ a bushel, with December corn jumping 4.3% to $3.91 ¼ a bushel.

"The volatility has been dramatic today as the holiday generally results in lighter volume and so the influx of fund buying has driven these markets," Darrell Holaday at Country Futures said.

As it was, funds were estimated buyers of 3,000 wheat and 6,000 corn contracts with an hour or so of trading to go.

Why the preference for grains? It was in part down to the position closing that might be expected before a holiday, with investors closing a trade of shorting grains and going long on soybeans which has, of late, been a profitable one.

"Leadership has moved to the corn and wheat to the upside primarily as a result of balancing of spreads between the soybeans and the corn and wheat after major moves in those spreads in the first two days of the week," Mr Holaday said.

Two cheers

All this did little to help US grain exports, of course, with stronger prices more than making up for a weaker dollar.

Indeed, US grain once again missed out on a 300,000-tonne Egyptian wheat tender which went in the main to Russia, with 60,000 tonnes of French thrown in too.

Many Paris traders actually viewed that as a bit of a disappointment, given that Egypt has been tightening up its criteria, a fact which in theory might mitigate against Black Sea grain, which is often of poorer quality.

Still, Paris's January contract ended up E1.50 at E133.25 a tonne, with London ending up £0.25 at £107.50 a tonne, the best finish for a spot contract since July.

Support level

Softs managed a firm finish too, helped by the weaker dollar.

For cocoa, this helped overcome some surprise at a strong start to the main crop season in Ivory Coast, the world's biggest producer.

March cocoa ended up 2.2% at $3,320 a tonne in new York, and 1.1% higher at £2,175 a tonne in London.

Sugar was helped by fresh concerns for supplies from Brazil, the world's biggest producer, as well as its decline earlier in the week to support levels near 22 cents a pound.

"This has been the lower end of the current trading range, with both the trade and end user still willing to buy around this level," David Sadler at Sucden Financial said.Raw sugar for March ended 0.24 cents higher at 22.32 cents a pound in New York, with white sugar closing up $4.50 at $604 a tonne in London


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