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Evening markets: palm slips, wheat sprouts

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Some farm commodities missed the big US markets more than others. Palm oil, left to its own devices by a US holiday, slipped to a four-week low while Paris wheat edged to three-month highs.

Traders blamed palm oil's 76 ringgit, or 3% drop, to 2,445 ringgit a tonne on Malaysian export data which, while showing a rise in shipments, underwhelmed some investors.

Intertek Testing Services, the cargo surveyor, said that shipments were, at 979,000 tonnes, 0.6% higher in the May 1-25 period than a month before.

More to come?

And some investors thought that, with palm oil closing at its day low, there was further weakness to come.

"Prices are bound to fall further because of weak exports," a trader said.

"The next trading range is bound to be 2,350 to 2,380 ringgit."

Oil failed to provide any immediate support, softening ahead of an Opec meeting expecting to rule out further production cuts, with European markets also weakening on disappointing German business confidence data.

Nonetheless, fears that more abundant Indonesian supplies will take over much of Malaysia's shipments may prove exaggerated if reports are true that Jakarta is considering a resumption in export taxes.

Wheat makes ground

Palm oil's example was little help to rapeseed, an alternative source of vegetable oil, which lost ground in Paris. The August contract lost E3.00 to E318.75 a tonne, with November losing E3.25 to E323.25 a tonne.

However, wheat continued where it left off last week, even without Chicago's help, adding E0.50 pretty much across the board.

That took August wheat to E153.00 a tonne and November to E159.00 a tonne – the highest for both contracts since early February.

European wheat has been supported not just by transatlantic influence, namely a strong Chicago, market but local factors too.

Accoe, the Spanish merchants' association, has estimated Spain's crop at 13.5m tonnes compared with 22m tonnes last year. Besides smaller plantings, what wheat has made it into the ground has suffered from dry weather.

Some Eastern European crops have suffered from rainfall shortages too.

By Mike Verdin

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