Morning markets: ags extend losses. even without US help

Markets in Asia kept the torch alight for agricultural commodity bears.

US markets, which tend to set the pace for world prices, may be closed for the July 4 holiday to celebrate independence from Britain (which has allowed America, among other things, to develop a decent football team).

But the largely negative momentum alive in the last session on US ag markets – although not stock markets, with the Dow Jones industrial average and S&P 500 setting record closing highs – hung around to give sellers the whip hand in Asia on Friday.

'Picture is slowly improving'

Palm oil, for instance, dropped 0.7% to 2,408 ringgit a tonne in Kuala Lumpur as of 08:45 UK time (02:45 Chicago time), on course for a sixth negative close in seven sessions, undermined by the strength of the Malaysian ringgit besides the broadly negative market mood.

The ringgit hit 3.1835 to $1 on Friday, its strongest since November, reducing the appeal of Malaysian exports, such as palm oil, to buyers in other currencies.

Still, pressure was limited by firm Malaysian cash markets, with prices, albeit in dollar terms, up $2.00-2.50 a tonne for refined palm oil, and products such as palm stearin, in Malaysia.

Crude oil was a little higher too, reclaiming $111 a barrel, although that said it is till on crouse for its biggest weekly loss since early January. Crude has a large influence on palm oil thanks to the vegetable oil's use as a raw material for biodiesel.

And there remain concerns over the threat of an El Nino weather pattern, which has a habit of causing dryness in South East Asia, where the great majority of the world;' palm oil is produced.

In some ways, the "picture is slowly improving for the market, as while output is expected to improve, the threat of El Niño and the eventual reality of the event can have adverse effects on production", Citigroup's Sterling Smith said.

Rubber eases

Also in Asia, rubber dropped back 1.3% to 211.90 yen a kilogramme, if still remaining well above the 190.30 yen a kilogramme it hit last month, the lowest for a benchmark contract since July 2009, undermined by Thai political crisis which looked like undermining any action to stem supplies of the commodity.

Thailand is the top natural rubber producer, with Indonesia and Malaysia responsible for more than 70% of world output.

The weakness of crude this week has been a fresh negative factor, given that oil is a source of synthetic alternatives to natural rubber.

On a more positive note, rubber inventories at Japanese ports were, at 21,205 tonnes, down 2% from 10 days earlier, data from the Rubber Trade Association of Japan showed.

And the strong US jobs data, which send shares soaring in the last session, might be expected to limit further decline, given that the tyre ingredient, as an industrial raw material, is usually more attuned than food commodities to broader economic factors.

Soy slips

Elsewhere, in China, a huge commodity importer, ag prices were broadly negative too, with soybeans for January ending down 0.4% on the Dalian at 4,336 yuan a tonne, amid reports of huge stocks at ports and fresh attempts to cancel import orders from Brazil.

Soymeal for January edged lower too, by 7 yuan to 3,350 yuan a tonne, while January soyoil, the other main soybean processing product, was 0.3% lower at 6,750 yuan a tonne

Dalian corn for January dropped 0.4% to 2,323 yuan a tonne.

The latest Chinese weekly corn auction from state inventories showed far better sales volumes, at 1.56m tonnes of the 5.01m tonnes offered.

Last week, 981,000 tonnes were sold out of 5.00m tonnes offered.

Still, prices were lower this time, at 2,130-2,229 yuan a tonne, compared with an average of 2,238 yuan a tonne last week.

Some softs performed better, with Zhengzhou sugar for January nudging 3 yuan higher to 4,958 yuan a tonne.

But cotton for January dropped 20 yuan to 14,830 yuan a tonne, a contract closing low, extending a decline in line with prices in the US, on improved US crop condition.

Pre-holiday trade bad for corn. But wheat, robusta rise
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