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Morning markets: crops await inspiration

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Crops once again proved a mixed bag, supported in the US by a weaker dollar but not inspiring the confidence investors need to give the rally fresh legs.

The dollar fell to a new lowest-for-14-months against a basket of currencies after minutes of the latest Federal Reserve interest rate-setting committee signalled that borrowing costs may stay low for some time.

Concerns are also waning for the global economy, weakening the attractions of a currency viewed as a safe haven. Growing enthusiasm for risk helped the Dow Jones close above 10,000 points on Wednesday for the first time in a year.

The euro hit $1.4956, its highest since August last year.

'Unfavourable' weather

That was helpful to US crops, which become more competitive as exports when the dollar wanes. But they lacked a spark needed to restart their rally.

Certainly, the weather forecast still looks poor, with temperatures set to drop below freezing in the Midwest tonight.

Meteorlogix said: "Freezing temperatures in the western Midwest may have damaged any immature crop.

"The weather pattern will remain unfavourable for crop dry down and the harvest throughout the Midwest."

Done enough?

But, with corn prices up more than a quarter over the last month or so, there is a feeling that the market may have done enough without clear evidence of crop damage.

A further sign of inflation pressures would be another potential rallying point, encouraging funds to invest in assets likely to keep pace with rising consumer prices.

Chicago corn for December slipped 0.5 cents to $3.82 ½ a bushel, while wheat for the same month dipped 3.75 cents to $5.09 ¼ a bushel.

Soybeans for November managed a 1 cent gain to $9.95 a bushel.

Palm steady

Its vegetable oil rival palm oil also managed it into positive territory in Kuala Lumpur, with traders citing a rising crude price, besides hopes for exports, as a reason to jump on board.

But gains were limited by a stronger ringgit.

Benchmark December palm oil closed the morning session on the Bursa Malaysia derivatives exchange up 9 ringgit at 2,169 ringgit a tonne.


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