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Morning markets: Shanghai share dive dents crops

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Soybeans' rally ran out of steam amid some technical turbulence, and as another fall in Chinese stocks encouraged investors in many markets to draw in their horns.

Month ends often witness some squaring of positions for accounting purposes. This month end also co-incides with the start of the delivery period for Chicago's September contracts, which looks a potential trap for soybeans.

Investors are expecting little or no delivery on September soybean or soymeal contracts, the market being viewed as so tight that trade sellers will have found homes elsewhere. So any news of deliveries is likely to be taken badly, as it did a few weeks ago when the August contract reached its demise.

Meanwhile, Shanghai shares took another turn for the worse, down 6.5% at 06:45 GMT on lingering fears that China's economy, which is supposed to be pulling the world out of recession, is in such good shape as investors have believed. Shanghai's main index has now slumped 23% from a peak on August 4.

Benign weather

Shares in other Asian equity markets fell, while the dollar strengthened a touch, making it harder work for dollar-denominated assets to look good value on export markets.

New York oil for September down 0.8% to $72.16 a barrel.

As an extra headwind for soybeans, weather forecasts look benign, increasing the chances of a good crop and richer supplies.

Meteorlogix forecast "generally favourable conditions for pod setting and filling soybeans through the Midwest with adequate rainfall in most areas".

Soybeans for September dipped 8.5 cents to $11.27 ½ a bushel, with the new crop November contract down 16 cents at $9.95 a bushel.

Grains slip

Wheat was also lower, down 3.5 cents at $4.63 ½ a bushel for September delivery, remaining within 6 cents of a 2009-low set two weeks ago.

The crop has found headway difficult following a huge northern hemisphere harvest, on top of already-large global stocks.

September corn kept its head above water, just, adding 0.5 cents to $3.21 ¼ a bushel, with the December contract following the broader market lower, down 2 cents at $3.27 a bushel.

Trading in palm oil was closed on Bursa Malaysia's Derivatives Exchange on Monday for a public holiday.


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