NEW YORK: Agriculture futures rallied Tuesday after reports of strong export demand for wheat and corn spotlighted the extreme tightness of global grain supplies. Elsewhere, energy prices declined as the threat of hurricane damage to oil operations subsided, while industrial and precious metals also trended lower. Egypt bought 240,000 tons of soft, red winter wheat overnight from the US. Egypt has emerged as a major buyer of US soft, red wheat - the kind used in flatbreads and crackers - even as prices have climbed to decade highs. Dan Basse, president of AgResource Co., estimates Egypt s purchases so far this year amount to 46 percent of the US Department of Agriculture s total wheat export forecast. Market conditions are strained: All told, the US has already exported 140 million bushels of this year s 160 million-bushel crop of soft, red wheat, he said. There are still nine months left in the crop marketing year. Wheat for December delivery jumped 13 cents to end at $7.04 a bushel on the Chicago Board of Trade. The corn market also got a jolt Wednesday after the USDA reported that Iran - not a usual purchaser of US grain - bought 120,000 metric tons of corn. December corn picked up 6.25 cents to close at $3.55 a bushel. Soybean prices rose in sympathy, gaining 3.75 cents to $8.31 a bushel. Other commodities markets remained sensitive Wednesday to the same developments affecting global equities. Investors have been increasingly wary about the effect of financial market turmoil on the broader economy - and what it means for demand for the raw materials that sustain economic growth. The commodities markets have suffered some weakness in recent days as investors shy away from riskier investments. Copper, zinc, led and tin prices retreated on the London Metal Exchange, while nickel notched a gain of more than 4 percent. I think the overall sentiment toward the metals continues to be uncertain, said Sudakshina Unnikrishnan, metals analyst with Barclays Capital in London. Nothing about supply or demand has changed fundamentally, she said, adding that lead, tin and zinc may be poised for a new move higher. Nymex copper for September delivery fell 9.5 cents to settle at $3.15 a pound. Precious metals finished lower as the US dollar gained ground against other world currencies. The tight credit conditions in some arenas have caused a scramble for cash, producing temporary extra demand for the dollar at the expense of other currencies, said Geoff Blanning, head of emerging market debt and commodities at Schroder Investment Management in London. The dollar s recent gains, while modest, have capped gold prices. Gold, seen as a hedge against inflation, typically trades opposite the dollar. December gold slipped 30 cents to settle at $666.20 an ounce. September silver lost 22.5 cents to end at $11.51 an ounce. Meanwhile, energy prices declined as the threat of Hurricane Dean faded. Dean weakened to a less dangerous Category 1 after moving over Mexico s Yucatan Peninsula. Mexico s state-run oil company, Petroleos Mexicanos, shut down some oil and natural gas installations, but the enfeebled storm was not expected to cause much damage. Dean is forecast to make a second landfall on Mexico s eastern coastline on Wednesday. The energy market has also been pressured by the problems in credit markets in recent weeks, with some investors cashing out of highly liquid oil holdings to cover losses elsewhere or pulling back on worries that financial market problems could crimp economic growth. Light, sweet crude for September fell $1.65 to settle at $69.47 a barrel on the Nymex, while September gasoline futures lost 7.28 cents to $1.8637 a gallon. Energy traders are looking ahead to a weekly report on petroleum inventories, due out Wednesday. Analysts polled by Dow Jones Newswires expect the Energy Information Administration to report a 600,000 barrel-draw on US gasoline stockpiles and a 2.8 million-barrel pull on crude inventories. The nation s inventory of crude oil fell by a surprising 5.2 million barrels in last week s report, but crude supplies in storage remain at above-average levels.
