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Morning markets: crops edge higher as long-awaited data loom

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The big day for grain markets has arrived.

The US Department of Agriculture will later unveil a double bill of influential reports - an annual report on US crop sowings, and quarterly briefing on grain inventories, as of March 1 this time.

But the day started as others so far the week, with gains for agricultural commodities.

Whether these then follow the pattern of collapsing in the live trading session will depend on the outcome of the reports, which have reputations for moving prices the daily limit in Chicago, in corn at least.

"Most are looking for a wild day - I can't disagree," Mike Mawdsley at Market 1 said.

"Anything is possible," within, of course, the exchange price limits, which for corn are $0.40 a bushel, equivalent to a 6.6% shift.

'Imports will increase significantly'

In early deals, crops had one big thing going for them – a tumble in the

dollar

, which dropped 0.5% as of 08:30 GMT as concerns about the global economy ebbed, a factor also seen in firm London

copper

prices.

Weakness in the dollar makes commodities priced in the greenback cheaper for investors buying with other currencies.

And there was also some crop specific news to factor in, which was positive for

soybeans

, at least.

The China National Grain and Oil Information Centre crop bureau forecast the country's imports of the oilseed at 57m tonnes in 2011-12, an 8.9% rise and above the 55m tonnes the USDA is factoring in.

"China's imports in the coming months will increase significantly," the centre said, forecasting that crushers would boost purchases for delivery in the July-October period, for which they have so far only filled 20-30% of needs.

Imports, as measured by soybean arrivals at Chinese ports, would peak in May at 5.8m tonnes, after running at more than 4m tonnes this month and in April.

Soybeans for May rose 0.5% to $13.62 ¼ a bushel, increasing the margin over the 20-day moving average, at $13.52 ½ a bushel, which the lot came close to finishing below in the last session for the first time since January.

Japan switch

Wheat

too had a boost, in an estimate from Japan's farm ministry that it would import 764,000 tonnes of feed wheat in 2012-13, a jump of 78% on this year.

Wheat for May gained 0.6% to $6.16 a bushel.

The Japan forecast, however, held a downside for

corn

, in that it reflected a switch by the country's livestock farmers from the grain to wheat.

And, for all the fuss about Chinese corn buying, Japan is by far the largest importer, at some 16m tonnes a year.

Corn got another knock from a report from US Department of Agriculture attaches in Brasilia that the Brazil corn crop in 2012-13 would come in at a record 68.0m tonnes, and up nearly 10% on this season's result, if of course a preliminary estimate.

New crop December corn - which in the last session set an intraday, one-year low of $5.22 a bushel- rose, but by a modest 0.2% to $5.25 ¼ a bushel. (The much-watched soybean: corn ratio in early deals hit 2.50.)

Old crop May corn gained, but lagged wheat, adding 0.3% $6.06 a bushel.

'Massive clean-out'

Still, all this is as of naught compared with the main course of the USDA data expected later, and which are expected to show a big jump in US corn sowings, of 2.3m acres, to 94.7m acres for 2012-13.

The expectation reflects benign early sowing conditions, besides the strong corn prices earlier on in 2012, before ideas of high sowings deterred funds.

As Luke Mathews at Commonwealth Bank of Australia said: "There has been a massive clean-out of speculative longs in the Chicago corn market over the past few weeks."

Still, the corn inventory number, has also been gaining increasing attention, and is pegged at 6.15bn bushels.

"High numbers of animal units on feed the front end of the crop year has the bulls talking up a possible lower than expected corn stock number," Benson Quinn Commodities said.

"The bears may argue that the mild winter, better-than-average conversion and continued heavy feeding of distillers' grains could equate to a lower rate of corn usage."

'Long too many soybeans'

For soybeans, the switch into corn is expected to limit sowings to 75.3m acres, up 300,000 acres from last year, while inventories are seen coming in at 1.39bn bushels.

"A bearish surprise on this estimate does not bode well for a fund community that is most likely long too many soybeans near the high side of [the current price] range," Benson Quinn said.

For wheat, acres (much planted last autumn) are seen at 57.4m, and inventories at 1.22bn bushels.

The stocks number is seen as reflecting largely the extent of the shift by livestock feeders from expensive corn to wheat, which has held an atypical discount for much of the last year.

Sugar sweetens

The sowings data will cover

cotton

too, with US sowings seen falling perhaps as much as 13% thanks to the tumble in prices over the last year.

This concern has indeed helped futures revive, posting on Thursday their first close in seven sessions.

The fibre stood 0.04 cents higher at 93.58 cents a pound in New York, for May delivery, on Friday.

And New York raw

sugar

extended its rebound, adding 0.3% to 24.68 cents a pound for May, helped by renewed fears for the Brazilian cane crop, which Macquarie downgraded on Thursday.

By Agrimoney.com

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