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Morning markets: bumper crop hopes weigh on prices

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Farm commodity prices remained sluggish in Chicago, although recovering in Kuala Lumpur, as the prospect of heavy US crops once again deterred buyers.

Informa Economics' estimate on Thursday that both US corn and soybean crops would come in at records, and far above current US Department of Agriculture forecast, continued to cast a pall over sentiment.

Bulls had two major hopes to cling on to. One was that a return of low prices would fuel Chinese buying of soybeans.

The country has often this year used prices drops as buying opportunities, traders said.

Frost threat?

A second hope was of frost. Some forecasters are predicting that a freeze will hit the northern Canadian Prairies early next week.

There is also talk of a frost in US growing districts within the next couple of weeks, as predicted by a weather model.

However, this looked far away on Friday, with Meterologix forecasting for now "generally favourable conditions for pod setting and filling soybeans through the Midwest with adequate rainfall in most areas.

"Developing warmer weather will benefit the crop."

The service added in a corn forecast that Midwest temperatures would be "near to below normal, warming to near normal Sunday through Tuesday".

Price drops

In Chicago, September soybeans lost 1.25 cents to $9.80 ¾ a bushel, albeit in miserable volumes, at 06:40 GMT, with the better-traded November contract down 0.5 cents at $9.41 a bushel.

It has been a poor week for soybeans, particularly for the old crop contract, which has slumped 14.6%. Its premium over the new crop lot has fallen from 12.3% to 4.2%.

Corn for September was 1.75 cents down at $3.09 ¼ a bushel, with the December contract 0.5 cents lower at $3.15 a bushel.

Wheat for December was 1 cent lower at $4.77 ¾ a bushel.

'Base level'

In Kuala Lumpur, palm oil slipped to its lowest since late July, in part dragged down by vegetable oil rival soy, before recovering in late morning trade,

"We are testing the 2,200 ringgit levels but may not going any further down because many commodities markets are finding a base level," said a trader told Reuters, the news agency.

The benchmark November palm contract closed the morning session on Bursa Malaysia Derivatives Exchange up 2 ringgit at 2,220 ringgit a tonne, having dropped to 2,204 ringgit a tonne earlier.


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