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Morning markets: corn 'hurt' by favourable weather

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Food commodities started the week in poor humour, sapped by moves in external markets, with corn especially weak on the prospect of good weather in key US growing regions.

One unhelpful stimulus was a strengthening dollar, which was underpinned by sentiment, following the weekend's meeting of the G8 industrialised countries, that economic recovery was still in its early stages.

The elections in Iran - which re-elected hardline president Mahmoud Ahmadinejad, and have prompted mass rallies by both supporters and opponents - also added to the appeal of the dollar, which has become viewed by investors as a safe haven.

A strong greenback is bad news for dollar-denominated commodities, however, tending to depress prices by making them more expensive for foreign buyers.

Weather factor

Oil retreated further from its eight-month highs. New York crude for July stood $1.11 lower at $70.93 a barrel at 06:30 GMT, with Brent crude down $0.97 at $69.95 a barrel.

Among Chicago grains, corn was the worst effected, sliding 6 cents, or 1.4%, to $4.19 ½ a bushel for July delivery. Weather forecasts are pointing to benign growing weather, perhaps heralding better yields than many investors have been banking on.

Soybeans lost 9 cents to 12.36 ¾ a bushel for July, with forecasts of a 32-year low in US stocks ahead continuing to provide some support.

Wheat, which had already suffered stiff punishment from investors last week, lost 5 cents to $5.80 a bushel.

'Hand to mouth'

In Malaysia, palm oil dropped 1.8% to 2,420 ringgit per tonne in morning trade on Bursa Malaysia's Derivatives Exchange, sapped by sagging demand as purchasers bided their time.

"Orders for palm oil have been paltry so far this month compared to last month," a trader said.

"Buyers are on a hand-to-mouth basis rather than doing any restocking."

Market rumour is that Malaysian palm oil production will rise 8-10% this month, potentially rewarding buyers for patience.

By Mike Verdin

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