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Morning markets: commodities stage modest revival

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Chicago commodities staged a modest recovery on Tuesday, helped by bargain hunting, despite continued squalls in external markets, which helped keep the lid on Kuala Lumpur palm oil.

Oil slipped for a third day as declining equity markets signalled caution over global economic recovery. Indeed, Tokyo stocks closed 2.9% lower.

Brent crude lost $0.35 to $69.89 a barrel for July delivery, with New York light crude off $0.44 at $70.18 a barrel at 06:30 GMT.

But at least the day started with a steady dollar, the villain on Monday for holders of long positions in commodities. Then, a stronger greenback, which made dollar-denominated commodities more expensive for importers holding other currencies, depressed commodities across the board.

'Looking for value'

Soybeans were the main beneficiary among the big Chicago crops of the clearing skies, recovering from their biggest drop in four months to stand 15 cents higher at $12.12 a bushel for July delivery.

Old crop beans in particular have been helped by official forecasts that the US is on course for its thinnest stocks of the crop in 32 years.

Still, forward contracts also revived on Tuesday, with November soybeans up 11.75 cents at $10.36 ½ a bushel.

"It was a steep fall and funds would appear on any large correction, looking for value," said Garry Booth, a trader with MF Global Australia

July corn, meanwhile, recovered 2.5 cents of its lost 19.5 cents to stand at $4.08 ½ a bushel.

Wheat, which had proved the most immune to the sell-off, was 3.75 cents higher at $5.79 a bushel for July delivery.

Export concerns

Kuala Lumpur palm oil, however, failed to pull off the same recovery, losing 24 ringgit to 2,365 ringgit a tonne for the benchmark September contract in the morning session on Bursa Malaysia's Derivatives Exchange.

Data last week showing higher than expected inventories and weaker exports have stoked concerns that the market may not prove as tight as investors had thought.

"There are arguments on whether palm oil shipments will recover in June," a trader said.

"Shipments may recover but it will not be enough to make cargo surveyors pin export data in positive territory."

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