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Morning markets: corn continues to lead crop rally

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Corn's revival continued on Tuesday, helping other commodities higher despite further confirmation that US crops were in fine condition, promising bumper harvests.

External markets provided some support, in the form of a weaker dollar.

The euro climbed 0.3% to $1.4275 against the greenback, amongst its highest levels since the start of June, making dollar-denominated commodities look better value for foreign buyers.

Oil inched higher too, up $0.23 at $68.60 a barrel for New York's September light crude contract at 06:30 GMT.

(Tokyo's Nikkei share index, for the record, failed to extend its nine-day winning streak - but only just, closing down just 1.4 points.)

Corn in demand

In Chicago, September corn added 4 cents to $3.26 ½ a bushel, taking its gains since last week's 2009-low to 7.4%.

The grain has been helped by expectations that a US Department of Agriculture report on August 12 will make a cut – which traders have estimated at between 200,000-1m acres - in America's corn plantings, thanks to the hindrance of rain in the early summer.

Such hopes are continuing to prompt short covering, with data on Monday showing a surprisingly strong weekly US export inspections of 52.2m bushels helping give the rally some steam.

Crop progress statistics released later were considered neutral, with 70% of the US corn crop considered in good or excellent condition, compared with 71% a week before.

Soybeans make ground

The soybean crop also continued to fine shape, with 67% of the crop in the top two condition brackets, the same as a week before.

Nonetheless, optimism over corn spilled over into soybeans, which look likely to be in relatively short supply in the US even assuming a good crop.

August beans added 10.5 cents to $10.31 ¾ a bushel, with some new-crop contracts doing even better. March 2010 beans, for instance, added 13.25 cents to $9.30 a bushel.

Wheat, meanwhile, added 4.25 cents to $5.24 ¾ a bushel for September delivery.

The US spring wheat crop remains in good health, with 74% rated good or excellent, a 1 point drop on the week, and harvesting of winter wheat is, at 79%, not far behind the long-running average.

Palm dragged upwards

In Kuala Lumpur, palm oil also ticked higher, helped by stronger soybeans and oil.

One of palm oil's uses, besides in vegetable oils and soaps, is for making biofuels, a market very much linked to the crude price.

Benchmark October palm oil added 20 ringgit 2,118 ringgit a tonne in the morning session on Bursa Malaysia's Derivatives Exchange.

By Agrimoney.com

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