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Midday markets: crops continue wary rebound

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Grains and softs continued a cautious rebound on Tuesday despite the further spread of swine flu, which kept share and oil markets in the doldrums.

Israel and New Zealand confirmed cases of swine flu, adding to a list that already included the US, Canada, the UK and Spain as well as the outbreak's Mexico epicentre.

Combined with reports that regulators were demanding Citigroup and Bank of America raise extra capital, shares remained downbeat, with London's FTSE 100 index off 2.3% at 11:30 GMT. Oil prices were more than 2% lower, leaving both Brent and New York further below $50 a barrel.

Bouncing beans

Still, agricultural commodities, among the worst affected markets on Monday, trimmed losses, with soybeans staggering back into positive ground. Chicago's May contract was 9.75 cents higher at $10.14 ½ a bushel as traders considered that the China import story which supported the market earlier this month was still looking intact.

Wheat maintained its early strength too, up 5.5 cents at $5.13 ½ a bushel, helped by data showing backward US planning of the spring wheat crop.

Corn, where farmers had made greater headway, remained down if, off 2.75 cents at $3.69 ½ a bushel, more than a cent above its low for the day.

The pattern was mimicked in softs, where New York July coffee struggled 0.1 cents higher to 115.50 cents per pound, again throwing off early weakness.

Sugar was 0.2% up at 13.92 cents a pound with July cocoa crawling $8 higher to $2,389 a tonne despite report of favourable weather in Nigerian growing districts.

Genus revives

Agriculture-linked equities also had a better day. Hunan New Wellful, the China-listed pork producer thrust by swine flu onto the international stage, lost 1.5% to RMB7.10, a trifle compared with Monday's 10% loss.

Genus, the UK genetics group, for which pig producers are important clients, recovered all but 2p of the 18p lost on Monday, despite a cut from 825p to 580p by Panmure Gordon analysts in their target for the stock. The shares stood at 581p at 11:30 GMT.

"The beat up pig industry was just starting to emerge from over a year of very low (and in most cases negative) returns," Panmure said.

"Sentiment and uncertainty, both to consumer reaction and disruption of normal trade flows, could easily set recovery back."

However, fish farming groups gave back some ground gained on talk of the groups benefiting from a consumer boycott of pork.

Marine Harvest eased 1.7% while Nireus Aquaculture, up 16% on Monday, lost 1.3%. Norway's Austevoll Seafood marked time at NKr19.40 a share.

By Mike Verdin

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