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Morning markets: crops again defy predictions

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Crops once again defied predictions, this time of carryover weakness from the last session which ended with a whimper.

"The grains and soybeans sold off quickly towards the close - with outside markets strong," Mike Mawdsley at broker Market1 said.

"Caution ahead."

However, if danger does await, crops seemed little aware in early deals on Wednesday, straying little from opening levels.

'Cheap relative to gold'

The dollar provided no direction, standing broadly unchanged, with oil also giving the crop markets little influence, standing marginally lower.

Gold did its bit setting a fresh record high of $1,215.45 an ounce in Asian trading hours, which could have been a bullish steer for crops.

"The grain and soybean markets continue to trade in tandem with these outside commodity markets as the grains are seen cheap relative to gold… while January beans are worth less than half of what they were at their peak in 2008," Kim Rugel, at US broker Benson Quinn Commodities, said.

The question is whether there is still the money around to pour into crops, given the weak buying by funds on Tuesday, which many traders had banked on showing a start-of-the-month rally.

Importance of funds

For wheat, which is in plentiful global supply, Benson Quinn's Kevin Kjorsvik said: "Bearish fundamentals will weigh on prices on days where the funds aren't major buyers."

The grain stood 1.75 cents lower at $5.60 ¾ a bushel for December delivery at 07:45 GMT, with the better-traded March contract down 1.25 cents at $5.82 ¾ a bushel.

Corn slipped 1.5 cents to $3.98 ¼ a bushel for December, and 2.25 cents to $4.12 ¼ a bushel for March. Corn suffered the disappointment on Tuesday of delay to a government ruling on whether to permit higher levels of ethanol, of which the grain is a feedstock, in petrol.

Soybeans, meanwhile, added 2.25 cents to $10.61 ¾ a bushel for January delivery.

Golf opener

In Kuala Lumpur, palm oil was hardly at its most active either, as traders awaited comments from a key industry conference ion Bali which features some of the sector's top analysts.

(Tuesday's session, opening with a golf tournament, appears to have provided little in the way of fireworks.)

Benchmark February palm oil stood 5 ringgit lower at 2,490 ringgit a tonne.

By Agrimoney.com

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