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Renewed US frost threat sends corn higher

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Renewed prospects for a US frost spurred a recovery in Chicago crop prices, but with nowhere near as much power as the freeze-fuelled rally a week ago.

The global forecast system, a computer-based weather prediction model run by America's National Oceanic and Atmospheric Administration, suggested temperatures would fall to freezing, or thereabouts, early next week in a big stretch of the Midwest and into the east of North and South Dakota.

The forecast prompted a rash of short covering which took crops well above their lows.

"The damage from a freeze next week wouldn't be as severe as earlier in the month but it could still end the growing season in the northwest part of the [corn] belt and cause some crop losses," Vic Lespinasse, the GrainAnalyst.com analyst, said.

Different times

However, while corn did end strongly, it came nowhere near going limit-up, as it did on last week's freeze threat.

The December contract closed up 3.1% at $3.25 ½ a bushel. Soybeans for November added 9 cents to $9.22 ½ a bushel.

"What a difference a week makes," Mr Lespinasse said.

"Last Tuesday, corn and bean prices rallied wildly, exploding for huge gains on the threat of freezing temps the following week. This afternoon a similar freeze threat only generated a mild recovery and rally in these pits."

The relatively weak reaction reflected the decreasing vulnerability of crops as the season goes on, with autumn harvests well under way in many states.

Bear attack

Wheat even closed lower. It is not directly so affected by frost, with the cycle past harvest into autumn sowings.

While it was last week dragged sharply higher by corn, there was no repetition this time, with the December contract ending down 1 cent at $4.55 a bushel.

Indeed, traders talked of a drive by bears to take wheat below a technical resistance level of $4.53 a bushel, a point below which many automatic sell orders are placed, so likely to spark a fresh round of selling.

Many European contracts had better luck, despite a rise by the euro to a fresh one-year high against the dollar, making exports from France, if not the UK, less competitive.

Paris milling wheat for November added E0.50 to E121.00 a tonne, with London November wheat closing up £0.50 at £97.25 a tonne.

Softs harden

The weakening dollar helped many soft commodities make gains, with cocoa for December closing up 3.1% at $3,169 a tonne, its highest finish since July last year.

Support from a renewed appetite from investors for risk, following Monday's retreat, was also credited for the rise.

London cocoa for December ended 1.6% higher at $2,034 a tonne.

London was also eclipsed on sugar, with December white sugar ending 1.1% higher at $579.20 a tonne on Euronext while benchmark October raw sugar gained 1.3% to 22.07 cents a pound in New York.

By Agrimoney.com

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