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Morning markets: bad banking vibes wilt crops

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Crop prices made a gloomy start, overshadowed by unsettled external markets after Morgan Stanley revived concerns about the global financial sector.

The investment bank sent US shares into a late spiral on Wednesday by announcing a second straight quarterly loss and cutting its dividend, marring what had looked a reasonably promising results season for American banks. The Dow Jones closed 1.0% lower.

Morgan Stanley's bad vibes lingered to depress Thursday's start in many markets, including oil, with New York crude for June down $0.16 to $48.69 a barrel at 06:05 GMT and Brent dropping further below the $50 mark, off $0.24 a barrel at $49.57.

Two potential props, a small decline in the dollar and rising Japan shares, proved insufficient to prevent even Chicago contracts slipping.

Corn, as a key energy feedstock, was worst off, in percentage terms, down 2.5 cents, or 0.7%, at $3.81 a bushel. Hopes for US corn planting conditions are also, relatively, high.

That is not so true of wheat, where farmers in states around the US Red River Valley continue to struggle against mud and rain to get their spring crops planted. May wheat was 2.5 cents lower at $5.14 ¼ a bushel.

Soybeans were the best of a bad bunch, off 2.75 cents or 0.3%, at $10.43 ¼ a bushel for the May contract after, yet another, downgrade to Argentina's crop. This time, it was the Buenos Aires Grains Exchange chipping in to lowest its estimate by 800,000 tonnes to 36.2m tonnes.

The bad vibes spread east too, with palm oil for July delivery off 5 ringgit at 2,470 ringgit a tonne on Bursa Malaysia, albeit above a day low of 2,455 a tonne.

Some other contracts, however, fared less well, with the August contract plunging 204 ringgit to 2,406 ringgit, suggesting investors are concerned about easier future supplies, as Oil World, the sector analysts, warned earlier this week.

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