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Morning markets: crop rally slows, awaiting export curb news

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Barack Obama's state of the union address overnight did nothing to scare markets.

Indeed, its ideas, including plans to build high-speed rail lines and repair roads using the windfall gained from the end of wars in Afghanistan and Iraq, seem broadly well-received.



edged higher, securing $110 a barrel as of 08:00 GMT, as did London


, while


performed well in Asia.

Stocks added 1.1% in Singapore, Sydney and Tokyo.

'Market will do the work'

But agricultural commodities found headway more of a struggle than in the last session, as denials by Argentine and Russian governments took some of the sting out of rumours that both countries could be considering curbs on crop exports.

Besides, in Russia, where fears for a domestic supply squeeze caused by a rapid pace to exports is behind the speculation of restrictions, higher prices may be doing the job anyway of slowing trade.

"The key factor right now is the fact that Russian [grain] offers are not as competitively priced as they once were," Brian Henry at Benson Quinn Commodities said.

Excluding freight, "US


in the Gulf was a cheap as any wheat offer" on Tuesday.

"Additionally, the weather in the Black Sea region is turning much more seasonal with cold temperatures likely limiting the movement of grain."

So while exports curbs by Russian officials cannot be ruled out eventually, "for now I expect the market to do the work for them".

Wetter outlook

As for Argentina, forecasts for more rains appeared in latest European weather model, cutting the risk that


, especially, which still have time to recover somewhat will suffer quite so badly from a generally dry growing season.

"The European model is actually quite close to the midday GFS model for the next five days over Argentina and Brazil. However the model is substantially different with regard to the six-to-10 day outlook," weather service said.

"The European model has a lot more rain over central and eastern and northern Argentina than the GFS model is showing. The European model is showing a widespread 1 to 2 inch rain across 70% of Buenos Aires all of Entre Rios Santa Fe and Eastern Cordoba... then up into Chaco and Formosa.

"Clearly, this is significantly different."

'Now what?'

And then there are some technical factors to be considered.



for March managed to hit its 20-day moving average in the last session, but in closing 0.5 cents below it, lost a lot of plus points.

"The market's next objective should be its 100-day, which today comes in at $6.46 ½ a bushel. But we would expect that overhead resistance will intensify as the market attempt to close the roughly $0.15-a-bushel gap between the 20 and 100-day moving averages."

For followers of Fibonacci analysis, the contract also hit the 63% retracement level from its last low. "Now what?" Mike Mawdsley at Iowa-based Market 1 asked.

'Leading the charge'


chart looked more positive, with the feed product extending in the last session its distance above its 100-day moving average, broken above on Monday.

"Soymeal is leading the charge, for now," Mr Mawdsley said. And, indeed, on Wednesday, Chicago's March contract added a further 0.3% to $324.50 a short ton.

That was better than soybeans themselves, which gained 0.2% to $12.22 ¼ a bushel for March delivery.

And they in turn did better than wheat, up 1 cent at $6.34 ½ a bushel for March.

Corn was top of the heap, making some effort to head towards the 100-day moving average by adding 0.4% to $6.33 a bushel.

'Voracious appetite'

Still, even wheat was doing better than


, which eased 0.5% to 97.66 cents a pound for March, as markets continued to react to Tuesday's news of a rise to Indian export hopes.

"There are still some who think India's Cotton Advisory Board may have to raise their export projection again because of their next door neighbour's voracious appetite for cotton," Mike Stevens, the veteran Louisiana-based cotton analyst, said.

A growing premium of the May contract over the March lot "has been a red flag that there has been a loss of upward momentum", he added.

"Attempts at 99-102 cents a pound continue to run out of gas, and some traders are saying we put in a double top", a negative chart signal, in the last session. "Maybe so - only time will tell."


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