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Talk of harvest delays sends crops soaring

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Strong equity markets proved the cherry on a cake made with positive ingredients for farm commodity prices, helping Chicago corn close at its highest level since June.

There were some potential negatives around the markets on Monday, such as talk that Chinese crushers have cancelled two-or-three cargoes of US soybeans in favour of domestic alternatives.

Deutsche Bank was forecast on Monday to begin its huge position shifts prompted by a regulatory clampdown on position limits in wheat. That implies some form of wheat selldown.

And weekly US export inspection data were a mixed data. OK for wheat and good for beans but, at 24.6m bushels, disappointing for corn.

Harvest delays

Still, those negatives were blown away by the growing likelihood of poor corn and soybean harvesting weather for the US Midwest.

"The updated weather doesn't have any significant changes for this week with widespread rain still forecast starting Tuesday night in the western Midwest and spreading across much of the belt mid to late week," Vic Lespinasse, the analyst, said.

"This continues to support corn and bean prices due to the strong likelihood of additional harvest delays."

The US Department of Agriculture crop progress report due later on Monday is eagerly awaited, with traders expecting somewhere around 30% of soybeans to have been harvested, and roughly 20% of corn.

Closing highs

Not that investors were bothering to wait, with firm oil, a weaker dollar and stronger equities encouraging them to splash out.

The Dow Jones Industrial Average was standing more than 100 points higher when Chicago closed, buoyed by hopes for the third-quarter earnings season.

In Chicago, grains led the market higher. December wheat closed up 3.8% at $5.17 ¾ a bushel, the best close for a near-term contract since early August.

The grain may also have got a little nudge from talk of an Australian frost over the weekend, which threatened some crop damage.

Kansas wheat for December ended up 3.6% at $5.28 ¾ a bushel, narrowing its advantage over Chicago to 11 cents.

Rapeseed hits form

Back in the Windy City, corn for December also ended 3.8% higher, at $3.86 ¼ a bushel – its best finish since late June.

November soybeans closed up 1.9% at $9.96 ¼ a bushel, helped by the better export inspections as well as the harvest delays.

Some of that optimism slipped over into Europe too, despite a dollar rally running out of steam.

Firm Chicago soybeans helped Paris rapeseed for November add E1.75 to E269.50 a tonne, the best finish for a near-term contract since the end of August.

Paris wheat for November ended E1.00 higher at E127.50 a tonne, with London wheat for the same month ending up £0.65 at £101.25 a tonne.

Cocoa strike

And it wasn't as if all the action was in the flagship farm commodities. In New York, benchmark December cocoa jumped $32 to $3,305 a tonne, the best finish for a spot contract since early July.

Prices were helped by news that a union representing about one-third of cocoa co-operatives in Ivory Coast, the world's biggest cocoa producer, had launched a strike to press for more government support.

In London, March cocoa closed up £12 at £2,153 a tonne.


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