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Morning markets: China share slide unsettles crops

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Gloom set back in to crop markets on Wednesday as Shanghai stocks took a fresh slide, rattling confidence in an economic revival that is meant to be being led by China.

Shanghai shares stood 4.3% lower at 06:45 GMT, with the decline blamed on caution ahead of bank results which will give indications into loan growth and bad debts, and so shine a light on the health of the Chinese economic powerhouse. Shanghai stocks have now fallen by 20% from a high two weeks ago.

The concerns proved contagious, with Tokyo stocks ending 0.8% down at a three week low.

Oil for September slipped 0.2% to $69.00 a barrel in New York.

Slipping soybeans

Among Chicago crops, soybeans showed the biggest percentage drop.

Besides being particularly exposed to China, a huge buyer of US soybeans, the crop looks on course for a huge harvest, easing what appeared earlier this year as a tight market.

September soybeans lost 1.3% to $9.83 a bushel, dropped back within a percentage point of one-month lows, while the better-traded new crop November contract lost 1.4% to $9.45 ¾ a bushel.

Corn dropped 1.0% to $3.11 ¼ a bushel for September and by 1.0% to $3.19 ¼ a bushel for December.

'New cycle'

Wheat's relatively small 0.5% drop to $4.68 a bushel for September looked small compensation for bulls given that it remains within 3 cents of its 2009 low. December wheat was 0.5% down at $4.96 a bushel.

The crop continues to be undermined by forecasts for a bumper world crop, on top of already fat supplies.

"It's difficult to see what is going to change the market," as Australian grain trade insider told on Tuesday.

"Farmers have been asking me why prices are so low. I have been telling them we will need to get into a new [growing] cycle, which may change the fundamentals, for things to get better."

Palm follows

In Kuala Lumpur, palm oil was no better blessed despite some better looking fundamentals, with Malaysian production sagging yet demand firm ahead of the Asian festival season.

Benchmark November palm oil slipped 12 ringgit to 2,363 ringgit per tonne on the morning session on the Bursa Malaysia Derivatives Exchange dropped 12 ringgit.

Lower crude and soybean prices were blamed for encouraging profit-taking at a time when palm oil remains 20% above its July low.


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