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Morning markets: crops dented by dollar rebound

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US farm commodities retreated in early deals on Thursday after the dollar and oil, two major allies in crops' recent rally, turned against them.

The dollar rebounded off a 14-month low against major currencies after Chinese economic data failed to produce any surprises, showing growth at 8.9%.

The greenback's strength, which took the euro dip back below $1.50, made American exports such as crops more expensive on export markets.

Oil paused for breath, losing 0.6% to $80.85 a barrel, after being boosted on Wednesday by data showing a larger-than-expected draw on US petrol reserves.

Lower oil prices make less of a case for alternatives, such as ethanol, made from crops.

Fund buying

While weather remains unfavourable US farmers, with rain interrupting harvesting in many areas, this has been reflected in the jump in prices over the last few weeks.

Furthermore, the funds apparently getting back into crops – reportedly buying 15,000 corn contracts and 5,000 wheat lots on Wednesday – appear to be doing so in US trading hours.

December corn slipped 3.25 cents to $3.95 a bushel in Chicago, with November soybeans down 7.75 cents at $10.00 ¾ a bushel.

Wheat lost 8 cents to $5.34 ½ a bushel for December delivery, for once widening its discount against its Kansas peer, which slipped 6 cents to $5.40 a bushel.

'Losing momentum'

Palm oil did better in Kuala Lumpur, playing catch up with Wednesday's weather-inspired jump in US crops, which sent soybeans – palm's vegetable oil rival – up 2.6%.

Benchmark January palm oil gained 2.6% itself before retreating somewhat to close the morning session on the Bursa Malaysia Derivative Exchange up 41 ringgit at 2,209 ringgit a tonne.

A trader told Reuters, the news agency: "Looking at overnight rise in crude oil and soybean, our market should be on fire.

"But it looks like the end of the first session, the market is kind of losing momentum."


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