Wheat leads grains rally, oil tumbles
Sunday, 9 December 2007
CHICAGO, Dec 08 (Reuters): US grains rallied yesterday led by wheat prices that were lifted by renewed concerns over tight global supplies, while oil tumbled more than $3 a barrel as the dollar strengthened and eased concerns over inflation.
Gold fell, slipping below $800 an ounce, as the stronger greenback raised the cost of bullion overseas, while copper rose amid a decline in inventories and demand from China.
Wheat was the leader in grain markets, with sharp gains in United States lifting values in Europe as concerns over tight global supplies around 30-year lows triggered active buying.
The U.S. Agriculture Department will issue its December crop report Tuesday that will forecast surplus grain stockpiles in the United States and globally at year's end.
A poll of analysts by Reuters showed expectations for U.S. wheat ending stocks in 2007 at an average 297 million bushels, down from the USDA's October estimate of 312 million.
Concerns over global supplies, which rallied wheat prices to all-time highs in September fueled by drought decimating the crop in major exporter Australia, were rekindled Thursday when Canada cut its estimate of wheat production this year.
The strength in wheat helped to prices of Chicago Board of Trade corn and soybeans, which hit fresh 34-year highs.
CBOT March wheat rose the daily 30-cent trading limit to $9.21-1/2, and traders said that based on options trades, the contract was expected to open 3- ½ cents higher in overnight electronic trading Sunday.
Paris-based Euronext milling wheat futures ended higher, with January up 7 euros at 252 euros a tonne.
CBOT March corn rose 5-1/4 cents to $4.17-1/4, while March soybeans were up 21 cents to $11.38-3/4.
Oil tumbled more than $3 a barrel as the dollar rebounded and amid concerns over the health of the U.S. economy. It was a reversal of the more-than-$3 gains posted Thursday.
Oil prices have tumbled about 12 per cent since hitting a record high $99.29 per barrel on Nov. 21 amid uncertainty over global demand outlook next year against tight stockpiles.
U.S. January oil settled $1.95 lower at $88.28 a barrel after dropping to a low of $87.07. In electronic trading, U.S. crude was down $1.89 at $88.34 a barrel at 2057 GMT. London Brent was down $1.57 at $88.61.
Gold futures fell as the dollar strengthened, and on pressure from the gains in oil.
"Gold has been following oil. Also with the (job) numbers that came out, it shows the economy is fairly strong and the chances of the Fed (interest rate) cut of 50 basis points is diminishing. Now people are thinking it's only going to be a quarter point," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
Spot gold dropped to $795.40/$796.20 a troy ounce from $803.20/$803.90 quoted in New York late Thursday.
U.S. gold for February delivery settled $6.90 lower at $800.20 an ounce. It hit a low of $796.40.
Industrial metal copper rose to a one-week high after U.S. payrolls data for November came in slightly better than forecast, easing some concerns over the economy. The market was also supported by declining stocks and Chinese demand.
Gold fell, slipping below $800 an ounce, as the stronger greenback raised the cost of bullion overseas, while copper rose amid a decline in inventories and demand from China.
Wheat was the leader in grain markets, with sharp gains in United States lifting values in Europe as concerns over tight global supplies around 30-year lows triggered active buying.
The U.S. Agriculture Department will issue its December crop report Tuesday that will forecast surplus grain stockpiles in the United States and globally at year's end.
A poll of analysts by Reuters showed expectations for U.S. wheat ending stocks in 2007 at an average 297 million bushels, down from the USDA's October estimate of 312 million.
Concerns over global supplies, which rallied wheat prices to all-time highs in September fueled by drought decimating the crop in major exporter Australia, were rekindled Thursday when Canada cut its estimate of wheat production this year.
The strength in wheat helped to prices of Chicago Board of Trade corn and soybeans, which hit fresh 34-year highs.
CBOT March wheat rose the daily 30-cent trading limit to $9.21-1/2, and traders said that based on options trades, the contract was expected to open 3- ½ cents higher in overnight electronic trading Sunday.
Paris-based Euronext milling wheat futures ended higher, with January up 7 euros at 252 euros a tonne.
CBOT March corn rose 5-1/4 cents to $4.17-1/4, while March soybeans were up 21 cents to $11.38-3/4.
Oil tumbled more than $3 a barrel as the dollar rebounded and amid concerns over the health of the U.S. economy. It was a reversal of the more-than-$3 gains posted Thursday.
Oil prices have tumbled about 12 per cent since hitting a record high $99.29 per barrel on Nov. 21 amid uncertainty over global demand outlook next year against tight stockpiles.
U.S. January oil settled $1.95 lower at $88.28 a barrel after dropping to a low of $87.07. In electronic trading, U.S. crude was down $1.89 at $88.34 a barrel at 2057 GMT. London Brent was down $1.57 at $88.61.
Gold futures fell as the dollar strengthened, and on pressure from the gains in oil.
"Gold has been following oil. Also with the (job) numbers that came out, it shows the economy is fairly strong and the chances of the Fed (interest rate) cut of 50 basis points is diminishing. Now people are thinking it's only going to be a quarter point," said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
Spot gold dropped to $795.40/$796.20 a troy ounce from $803.20/$803.90 quoted in New York late Thursday.
U.S. gold for February delivery settled $6.90 lower at $800.20 an ounce. It hit a low of $796.40.
Industrial metal copper rose to a one-week high after U.S. payrolls data for November came in slightly better than forecast, easing some concerns over the economy. The market was also supported by declining stocks and Chinese demand.