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Wheat leads as crops join commodities rally

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Commodity markets jumped pretty much across the piste on the back of a falling dollar, with sugar, coffee and wheat leading the way for crops.

Stronger-than-expected US retail sales for October started the dollar rolling south.

While comments from Ben Bernanke, the US Federal Reserve chairman, who said that the US central bank was attentive to dollar movements, helped the greenback claw back some ground, the revival halted, rather than reverse, the commodities rally.

Oil was 3.6% higher at 17:00 GMT, with gold staying within a cent of a record $1,140.70 an ounce hit earlier.

Decent export data

Crops took the bait.

"The outside markets are supporting the market," US Commodities, the Iowa broker, said. "The US dollar is sharply lower, gold and silver are higher and crude oil is higher."

Indeed, soybeans January stood 2.1% higher at $10.07 ¼ a bushel in Chicago, taking aim at the first $10 a bushel close for the near-term contract for nearly two weeks, despite the harvest approaching its end without apparently too many mishaps.

"The soybean harvest is basically complete," US Commodities said, adding that "yields remained large through harvest".

Traders expect Washington data later on Monday to show the harvest more than 90% finished.

Brazil might also have been expected to hold prices back, with data from analysts at Safras e Mercado showing 62% of the soybean crop had been planted, 10 points ahead of the usual pace.

Still, if investors were looking for some bullish fundamental news on US soybeans, weekly export inspection data provided it, coming in at 59.8m tonnes, ahead of market expectations.

Harvest 'problem'

Not so for corn, which attracted inspections of a modest 21.9m tonnes.

But this tide lifted that boat too, setting the crop on target for its first $4-a-bushel close for three weeks. The December contract stood 2.9% higher at $4.01 ¾ a bushel.

If bulls needed an excuse from fundamentals, weather provided a little, with the Midwest seeing yet more rain in the first half of this week and next week.

"All this moisture, either in the form of rain or snow, will be a problem for corn, with roughly half the harvest still to go," Vic Lespinasse, analyst, said.

Traders expect Washington's data later to show the corn harvest 50-58% done.

Chicago vs Kansas

Still, December wheat did better, jumping 4.6% to $5.63 ½ a bushel in Chicago without apparently any helpful crop news at all.

Speculative buying, encouraged by the dollar's fall, was credited for the rise, which put the grain on course to close higher than its Kansas equivalent, which typically trades at a premium on quality grounds.

Kansas's hard red winter wheat for December delivery was up 4.0% at $5.62 a bushel.

Chicago's soft red winter wheat is a far more popular contract with speculators, besides having currently slightly better supply-and-demand dynamics.

Follow the leader

The rally was enough to help European crops close higher despite the stronger euro and pound.

"European wheat markets have edged higher today in very thin volume receiving support from a rising US market," Hugh Schryver, at the UK grain arm of Glencore, said.

January feed wheat ended £1.05 higher at £107.50 a tonne in London, with Paris milling wheat for teh same month ending up E1.50 at E133.50 a tonne.

February rapeseed ended E2.25 higher at E276.25 a tonne.

Softs firm

Among softs, the weak dollar helped New York raw sugar add 2.1% to 23.23 cents a pound, and arabica coffee beans for March close up nearly 4% at $1.3945 a pound.

Some concerns over a lack of high-quality Brazilian beans, following heavy rains, also fuelled coffee's rise, traders said.

London robusta coffee gained in sympathy, ending up $33 to $1,339 a tonne for January delivery.

Cocoa also ended higher in New York, up $22 at $3,156 a tonne for March delivery.


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