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Morning markets: China bean demand underpins crops

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Crops looked to a bright end to the week, with soybeans continuing to underpin the market following upbeat US export statistics.

It wasn't just the amount of soybean export sales which impressed analysts, hitting a seven-week high of 1.35m tonnes 58% above the average for the previous four weeks.

This left US soybean sales for the 2009-10 marketing year, which only started in September, at more than 70% of Washington's full-year forecast already.

'Insatiable' demand

It was the involvement of China too, the world's biggest soybean buyer, over which there have been some fears that demand would ease off in the later months of the year.

China took 914,000 tonnes of the soybeans, with an additional 116,000-tonne sale announced too.

"The Chinese demand seems insatiable at this point, and until South American production comes online this spring, the US market will be relied upon to meet that demand," Brian Liedl at US broker Country Hedging said.

Soybeans for January rose 6 cents to $10.45 a bushel as of 07:50 GMT, building on a close on Thursday which was the highest for Chicago's near contract since the last day of August.

Australia downgrades

And that helped the grains higher too.

Corn for December added 1.5 cents to $3.96 ½ a bushel, with wheat up 5.75 cents at $10.44 ¾ a bushel.

If investors were looking for some fundamental news to buoy prices, wheat provided some, with ProFarmer and Commonwealth Bank of Australia cutting forecasts for Australia's wheat crop.

Meanwhile, Indonesia, Asia's second-largest importer of wheat after Japan, said its consumption of wheat flour would rise 6% in 2010 from an estimated 3.8m tonnes this year.

Cheap deals

That said, the grain's supply-and-demand dynamics remain bearish, especially in the US, given that relatively high prices are choking off exports.

This was evident in the latest Egyptian tender in which US wheat, once again, was overlooked in favour of Russian, French and, this time, priced-to-go German grain too.

"If EU hard wheat is pricing itself at soft wheat levels in order to find business it shows just how weak demand is right now for quality wheat," Kevin Kjorsvik at Benson Quinn Commodities said.

"This doesn't bode well for overpriced US hard wheat much less soft wheat which is roughly 60-65 cents [a bushel] higher than French and Black Sea wheat."

Stronger exports

Palm ticked higher too n Kuala Lumpur, helped by firm export data besides the lingering concerns of the impact of monsoon rains on production.

Intertek Testing Services said palm exports from Malaysia, the world's second biggest producer after Indonesia, rose by 14.5% in the first 20 days of November to 930,100 tonnes.

Rival cargo surveyor Societe Generale de Surveillance put the rise at 15.6%, to nearly 954,700 tonnes, with demand rising in all major markets bar Pakistan.

February palm oil stood 16 ringgit higher at 2,387 ringgit a tonne.


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