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Markets gain as jitters ease

10/05/2011 @ 3:35pm

U.S. grain and soybean futures ended higher Wednesday, driven by a broad based recovery in commodity markets as global economic concerns eased.

Commodity markets benefited from less concern over the state of the world economy on outlooks for a bailout of Greece's economy. The lack of pressure from external financial markets drove the U.S. dollar lower and subsequently sent commodity markets rallying higher.

A weaker dollar makes U.S. commodities less expensive to world importers.

Grain markets had become oversold after experiencing steep losses during the past month and, once pressure from macroeconomic pressures eased, the door was open for an overdue correction, said Mario Balletto, analyst with Citigroup in Chicago.

Investors had previously reduced their exposure to risk, with traders liquidating positions in risky commodity markets due to lingering European-debt worries. An advancing autumn harvest attracted sellers to corn and soybeans recently as well.

Corn futures led the charge higher in the grain complex at the Chicago Board of Trade, garnering additional support from outlooks for stronger Chinese import demand this year and supportive production estimates from private forecasters.

Industry analysts were encouraged by the potential for Chinese demand, after U.S. Grains Council disclosed Tuesday that China's corn crop will be insufficient to meet its anticipated domestic demand and the country will need to import corn.

Private production forecasts by analytical firm Informa Economics provided another boost for prices, as the firm cut its yield estimate to 149.5 bushels an acre from 151 bushels an acre.

"Informa's estimate, although down from last month, was above the latest estimate from government forecasters, but it was deemed supportive as it may signal a directional change for yields by the government next week," said Balletto. Traders were expecting larger yield and production estimates, he added.

Featured buyers in grain futures included investment funds, which were estimated to be net buyers of 15,000 corn contracts, 8,000 soybean contracts, and 3,000 wheat contracts, moderate amounts.

Soybean futures rose 3 3/4 cents to $11.63 3/4. Corn for December delivery ended up 17 3/4 cents at $6.05 1/2 a bushel on the CBOT.

CBOT December wheat climbed 21 1/4 cents to $6.25 1/4, MGEX December wheat closed down 13 3/4 cents at $8.76 1/2 a bushel, and KCBT December wheat rose 13 1/4 cents to $6.99 3/4.

Other Markets

CBOT December soymeal finished up $3.10 at $305.20 per short ton, and December soyoil ended up 0.20 cent at 49.20 cents per pound. CBOT November rice ended up 17 cents, or 1.1%, at $16.01 1/2 per hundredweight.

CBOT December oats ended up 1/2 cent at $3.25 a bushel. The December ethanol contract ended up 2.4% at $2.388 per gallon.

-By Andrew Johnson Jr., Dow Jones Newswires; 312-347-4604; Andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires

October 05, 2011 15:42 ET (19:42 GMT)

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