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Morning markets: crops ride on improved commodity sentiment

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The weather forecasts aren't getting any better.

A broad range of commodities attracted, some, buying on Friday, on thoughts that recent declines had gone too day.

New York

oil

added 0.6%, not enough to get it back over $100 a barrel, but at least to see it knocking on the door of $99.

And if that underpinned the commodities complex, crops had continued concerns over weather to underpin them too.

Easy option?

In the US, talk is mounting still of the level of crops likely to be lost to the wet spring, with the approach of insurance cut-off dates suggesting that it is not just

corn

sowings which will be affected.

"We are hearing more talk of those in the severely wet areas may opt for [insurance claims],thus a big switch to more

soybean

acres may not happen," Mike Mawdsley at Market 1 said.

Soybeans, which are later sown, are sometimes considered a beneficiary, in acreage terms, of poor corn planting conditions.

At Benson Quinn Commodities, Jon Michalscheck said: "We are closing in the [claim] dates of May 25 and June 5 that has been on everyone's radar for the past few weeks, and that should provide some underlying support as we go through the next two week's worth of planting data."

Rain in Spain, but...

In Europe, those hopes of end-of-month rain for parched crops in France and Germany, the top two

wheat

-producing states, dried up.

"If you recall, the GFS model was developing a significant rain event for France and Germany in the 11-to-15 day period," WxzRisk.com said late last night.

The latest model, "model has this same weather system for May 31, but has the rain for Spain only. The rain does not get into any significant portion of France or Germany in the 11-15 day.

"And all of the Ukraine Eastern Europe and south west Russia stayed quite dry as well."

'Significant pent-up demand'

Analysts looked afresh, with an upbeat eye, at Thursday's US weekly export sales too, which failed in the last session to keep prices higher.

"Total US corn export sales were extremely strong this week, coming in at 1.15m tonnes versus 457,500 tonnes the week prior," Luke Mathews at Commonwealth Bank of Australia said.

"It signals that significant pent-up demand was uncovered as corn prices slumped in early May."

Sales of 672,200 tonnes of 2011-12 wheat were "heartening" too.

Wheat lags

In Chicago, corn led, adding 0.8% to $7.54 ½ a bushel for July delivery as of 07:10 GMT (08:10 UK time), with the new crop December lot up 0.7% at $6.66 ½ a bushel.

Soybeans were 0.5% higher at $13.86 a bushel for July and up 0.6% at $13.58 a bushel for the new crop November contract.

Wheat lagged, amid some worries nonetheless that the grain had done enough for now, despite potentially worsened weather.

"Wheat should probably take a breather from here until we get more good, or bad, news," Australia & New Zealand Bank said.

Chicago's July lot added 0.3% to $8.14 ¾ a bushel, but the Kansas and Minneapolis hard wheat equivalents, which avoided losses in the last session, struggled this time, falling 0.1% to $9.44 a bushel and 0.6% to $10.00 ¼ a bushel respectively.

'Could easily spike'

Cotton

, which suffered another week of negative US exports, ie cancellations, struggled too, easing 0.1% to 155.50 cents a pound for July.

The new crop December lot added 0.02 cents a pound to 119.21 cents a pound.

But do bigger gains lie ahead?

"The cotton market is currently weighing up the influence of declining global demand versus worries over 2011 production prospects," Mr Mathews said.

With weather conditions in the US, the top exporter, and China, the top grower, consumer and importer, "far from perfect, in our view, if crop failures materialise prices could easily spike higher".

By Agrimoney.com

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