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Morning markets: Wichita, FCStone join to revive crop prices

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Wichita, Kansas pitched in. As did FCStone.

As did speculation that the spectacular price falls in grains in the last session were overcooked by a decision by one, large, investor to quit.

"Market chatter was that one large fund unloaded

wheat

,

corn

and

soybeans

mid-session," Paul Deane at Australia & New Zealand Bank said.

The result was that investors felt less comfortable with short positions in agricultural commodities ahead of a long weekend than in the last session, even with external markets heading south.

Jobs jitters

Tokyo's Nikkei

share

index closed down 1.2%, with Seoul shares shedding 0.7%, and Shanghai shares down 1.1% in late deals.

Oil

eased further back below $89 a barrel, with

copper

weak too as of 07:10 GMT (8:10 UK time).

The drops were attributed to concerns over US employment data for August, one of the most closely-watched reports of the monthly economic calendar, besides lingering disappointment at Thursday's weak eurozone manufacturing data.

But, with agricultural commodities having got their selling in early, in the last session, they proved more resilient this time.

Another hot day…

Especially after Wichita's 51st successive day of temperatures of 100 degrees Fahrenheit, or more, breaking a 75-year-old record, reminded investors that the rain forecast for the US southern Plains may not get very far in improving conditions for sowing the 2012 hard red winter wheat crop.

"Conditions still look to be far from improving in the southern Plains ahead for the fall planting with drought conditions persisting through much of the region," Dave Lehl at Benson Quinn Commodities said.

"Another hot day is forecast for southern Kansas. Oklahoma and Texas remain in the news as drought conditions cause multiple wildfires."

Prices revive

Sure, cooler temperatures are forecast for the weekend, but this looks a mixed blessing for bears too, if it stokes frost talk given some credibility by a light freeze in northern Alberta, Canada.

Wheat rebounded 1.2% in Chicago to $7.24 ¼ a bushel for September delivery, and by 0.7% to $7.66 ½ a bushel.

Kansas, where hard red winter wheat is traded, added 0.5% to $8.76 a bushel.

And

cotton

, also grown in the South, took on 0.4% to 106.20 cents a pound in New York, for December delivery, with an uptick in Chinese prices helping too.

'Bullish'

As for FCStone, the broker helped by coming in overnight with a lowball estimate for US corn, of 146.3 bushels per acre, just as many traders were wondering whether things were so bad for the crop after all.

The estimate, and a forecast of a 12.35bn-bushel crop, compare with US Department of Agriculture figures of a 12.91m-bushel harvest, at a yield of 153.0 bushels per acre.

And, as Benson Quinn's Brian Henry noted, FCStone is using the USDA estimate for harvested area of 84.4m acres, "above many of the recent private estimates".

"There is no way around viewing [FCStone's] current estimate yield estimate as bullish," Mr Henry added.

Chicago corn for December gained 1.0% to $7.46 a bushel.

'Soon it will be too late'

FCStone's estimates for soybeans were less bullish, at 41.05 bushels per acre for yield and 3.03bn bushels for output – figures below the USDA's but not by much.

Still, the oilseed's prospects are diminishing rapidly with the US heat, and the lack of the good soaking that it needs by around now to fulfil its potential.

"Temperatures are expected to cool down, but still no widespread soaking rains are expected, thus further stressing moisture-starved areas," Mike Mawdsley at Market 1 said.

"Soon it will be too late for rains to help soybean yields," although there are improved hopes for rainfall in northern Iowa and southern Minnesota.

Soybeans for November added 0.6% to $14.43 ¼ a bushel.

Catch up

In Asia,

palm oil

added 1.2% to 3,046 ringgit a tonne in Kuala Lumpur, playing catch up with oilseed peer soybeans after a week of little trading thanks to local holidays.

Soybeans this week, after all, hit a three-year high earlier this week, and

soyoil

, palm oil's direct competitor, not far from doing the same. September soyoil was 0.9% higher at 58.22 cents a pound, within 5% of its April high.

Palm oil is more than 20% below its February top.

Tokyo

rubber

had less luck, weakened by falling oil, the source of synthetic alternatives, and the broader economic malaise to dip 1.1% to 369.90 yen a kilogramme.

Data later

As for later, the US jobs data have the potential for broadly moving markets.

And Informa Economics is due to take its turn in the round of analyst estimates ahead of the next benchmark USDA monthly Wasde crop report, on September 12.

By Agrimoney.com

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