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Morning markets: grains follow pre-Wasde script, this time

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Had the rally in grains any more puff left, after the last session's bumper gains, when


added the exchange maximum, and



In short, not a lot. At least as of 07:40 GMT (08:40 UK time).

Chicago corn for December, stood a further 0.5% higher, implying that not that much buying went unfulfilled.

And it was pretty much the top performer, with grains doing what they were (falsely) billed to have done in the last session, and shown small changes as investors positioned ahead of key data.

(Actually, rough


was doing better, up 1.3% at $16.185 a hundredweight for November delivery, as floods raised concerns for the crop in major importer the Philippines and top exporter Thailand, where government intervention is raising prices too.)

Solvakia vote

One trouble was cooler winds in broader financial markets, after Slovakia voted against boosting a eurozone bailout fund, leaving the plan on hold.

In fact, in the grand tradition of European Union democracy, it looks like Slovakia will go on holding votes until it gets the "right" answer, an outcome which looks on the cards eventually.

However, the ballot acted as a reminder that it is not only French and German resolve which matters on the course to spiking the eurozone debt crisis.

Many Asian


markets eased, with Sydney shares closing down 0.6% and Tokyo shares down 0.4%, while the


tended a touch higher.

Shanghai shares actually showed huge gains, of 3%, almost as if in defiance of the US Senate clearing a bill aiming to punish China for keeping its currency artificially devalued.

Wasde worries

However, crop markets had their own reason for caution too, with the US Department of Agriculture later on to release its monthly Wasde report on world crop supply and demand, expected to include fresh figures for US crops.

But exactly what figures? The consensus is for the forecast for domestic corn stocks, the most closely-watched figure, to be lifted from 672m bushels to just over 800m bushels as of the close of 2011-12.

Yet that depends on a lot of moving parts, such as the estimate for the ongoing harvest.

The talk is generally of yields beating earlier, downgraded expectations, an idea given some support by USDA data overnight showing the harvest proceeding at an average pace, and crop condition edging 1 point higher to 53% rated "good" or "excellent".

"We expect a bigger increase in corn ending stocks, as crop maturity and harvesting from yesterday's crop progress were both slightly higher than the five-year average," Lynette Tan at Phillip Futures said.

"The two figures also posted a significant increase compared to last week's crop progress."

'Remain tight'

However, analysts at AgResource on Tuesday pegged the US corn yield at 143 bushels an acre, implying the USDA needs to downgrade, rather than upgrade, its yield estimate.

And Luke Mathews at Commonwealth Bank of Australia said that even though "US corn stocks are forecast to be revised higher, supplies will remain tight by historic standards".

Furthermore, technical considerations are being given weight too, as guides in times of uncertainty. For corn, the grain began the day with a key battle to take its 200-day moving average, at $6.45 ½ a bushel (implying a gain of 0.5 cents) and stay above it.

The lot's 1.2% gain took it to $6.48 ¼ a bushel.

Farmer sales

As for Chicago December wheat, it in the last session trounced its 20-day moving average at $6.46 ½ a bushel, with the next technical resistance point seen at $6.65 ¼ a bushel.

The lot, while given support by corn, was steering clear of that contest in early deals, falling 0.3% to $6.58 ¾ a bushel.


for November fell 0.6% to $12.28 ¾ a bushel, with no confirmation of huge Chinese purchases of the oilseed, from the US or elsewhere.

But investors should not get too downhearted, Kim Rugel at Benson Quinn Commodities said, noting that farmers were hardly rushing to cash in on revived prices.

"Producer selling did pick up on yesterday's rally, but by harvest terms has been very light with cash basis market in the interior firming 20+ cents a bushel since last week," Rugel said.

"Seasonality" is also looking "supportive", with the "market over the past two years finding a harvest bottom during the week of October 5".

Big spread

Movement later on is expected to depend mainly on the Wasde, with the potential for corn to show huge moves given that its limits were extended to $0.60 a bushel following the last session's limit-up close.

As Mike Mawdsley at Market 1 noted, "the low could be $5.85 a bushel, the high could be %7.05 a bushel".


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