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Morning markets: Bernanke glow ripens crop prices

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Vegetable oil crops got off to a brisk start to the week, helped by the economic hopes stoked by US Federal Reserve chairman Ben Bernanke.

In Kuala Lumpur, palm oil added 1.9%. Chicago soybeans jumped more than 2%, as investors mulled what the improving economic outlook portrayed by Mr Bernanke might mean for demand for crops.

Mr Bernanke told a conference in Jackson Hole, Wyoming: "After contracting sharply over the past year, economic activity appears to be levelling out, both in the US and abroad, and the prospects for a return to growth in the near term appear good."

The comments helped Asian shares higher too on Monday, with Toyko's Nikkei index jumping 3.4% by the close. Shanghai stocks were 0.8% higher at 06:15 GMT.

Supply squeeze

Vegetable oil crops may be particularly sensitive to economic hopes, some analysts believe, being used in biofuels as well as livestock feeds, with demand for meat likely to revive as consumers feel more financially secure.

China, which has maintained growth during the global downturn, is already proving a more robust buyer of US soybeans than had been expected.

Furthermore, many vegetable oil crops are in short supply. The US estimates that American soybean stocks are heading for their lowest for decades, with domestic inventories of other oilseeds, including cottonseed and products, heading for sharp declines.

For palm oil, latest Malaysian data showed sliding inventories, sapped by firm demand while production in Sabah is showing a weak seasonal recovery.

Spillover effect

Palm oil for November closed the morning session on Bursa Malaysia's Derivatives Exchange up 45 ringgit at 2,390 ringgit a tonne.

In Chicago, September soybeans were 2.7% higher in small volumes. The better traded new-crop November contract was 21.5 cents higher at $9.94 ½ a bushel.

The good vibes helped Chicago grains too. Corn added 3 cents to $3.24 ¾ a bushel for September and 3.25 cents to $3.29 ¾ a bushel for December.

Wheat for September rose 3.75 cents to $4.63 ½ a bushel, creating a small comfort zone above its 2009 low of $4.57 ¾ a bushel set last week.

December wheat was 2.75 cents higher at $4.90 a bushel.


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