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Morning markets: corn builds on $4 a bushel

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Crops looked for a positive end to a positive week, helped by the prospect of further harvest-interrupting rain in the Midwest as well as the psychological factor of corn returning above $4 a bushel.

Traders had forecast that should corn make it back above the psychologically-important $4 mark - above which it closed on Thursday for the first time since June – such a move would inspire a rash of further buying.

So far, the prediction looks to be coming good, with Chicago's December contract up 4 cents at $4.07 ½ a bushel at 06:30 GMT.

Forecasts of further poor weather in the US Midwest helped, many traders said.

After receiving up to 1.5 inches in the last 24 hours, areas are poised for up to 1.25 inches today, with rains returning in the middle of next week, Meteorlogix said.

That's hardly ideal for a corn and soybean harvest period already running at its latest since records began in 1985.

'Fund buying 100%'

Still, not all analysts swallowed the idea of a weather-fuelled rally. The dollar is seen as playing a big part, and the greenback went on to the back foot again on Friday, making US exports such as food commodities more competitive.

Allendale, the Chicago broker, urged investors not to "be fooled" into overestimating the influence of rain, attributing strength not to "a fundamental move higher by any means" but "fund buying 100%".

Inflation fears have certainly spurred a wave of buying by investors who view crops as a way of hedging against rising prices.

For soybeans, Allendale said that while the crop is more greatly influenced by rain than corn, speculative buying is currently still the key.

Chicago soybeans for November added 14 cents to $10.19 ½ a bushel.

Wheat gains

Wheat, meanwhile, touched its highest levels since June, of $5.58 ½ a bushel, overhauling the best the grain managed in a July-August rally.

Fund buying has been widely credited for wheat's rebound, with wet weather posing a lesser threat, through difficult plantings.

Chicago's December contract stood 5.5 cents higher at $5.57 1.4 a bushel.

Oil factor?

In Kuala Lumpur, palm performed strongly too, jumping 1.5% in morning trade to its highest for seven weeks.

Some traders credited crude for the increase, despite a moderate performance by oil in the last couple of days. Palm is used in biodiesel.

Others, again, talked of fund buying.

The benchmark January contract closed the morning session on the Bursa Malaysia Derivative Exchange up 33 ringgit at 2,243 ringgit a tonne.

By Agrimoney.com

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