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Morning markets: Asian trading brings crops relief

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Crop prices once again stabilised in Asian trading hours as, with the dollar rally coming to a halt and little fresh in the way of US weather forecasts, investors sought fresh direction.

The question for investors is just how long the latest rout will last, after dragging Chicago wheat down 8% in two days, and corn by nearly 7%.

But, with the dollar losing a little ground again, so making US crops less expensive to foreign buyers, and stockmarkets stable there is some hope of an interruption in the flight for safety which has been a big part of the food commodities sell-off, by encouraging funds to quit.

The picture of crop fundamentals appeared little changed from Tuesday, with US weather forecasts still envisaging an improved harvesting scenario from that which appeared likely a couple of days ago.

Meteorlogix forecast, for the Midwest, "favourable harvest weather until rain arrives Thursday and Friday. Dry by the weekend again".

The US corn and soybean harvests are the most delayed since records began in 1985.

Hot money

Chicago wheat for December added 2.25 cents to $5.05 ½ a bushel by 07:45 GMT, recovering a little bit of ground against its Kansas peer, which added 1.5 cents to $5.12 a bushel.

Kansas wheat, whose higher quality typically earns a premium, last week fell to intraday discounts against its Chicago peer, which attracts far greater speculative money, besides having some short-term fundamentals in its favour.

The rebuilding of the premium has been a sign of the hot money reversing out of Chicago.

Corn, meanwhile, added 1.25 cents to $3.72 a bushel.

Soybeans, which have barely suffered from the sell off, slipped 2.25 cents to $9.71 ¼ a bushel.

Palm stocks

Their vegetable oil peer, palm oil, was also under the weather in Kuala Lumpur, amid continuing concerns for rising stocks amid a seasonal upturn in production.

Thoughts that tree stress might hurt yields this year, after a bumper 2008 crop, have waned, leaving traders to predict a rise of at least 15% in Malaysia's palm stocks this month.

The benchmark January palm oil contract closed the morning session on the Bursa Malaysia Derivatives Exchange down 8 ringgit at 2,162 ringgit per tonne by midday.

By Agrimoney.com

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