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Morning markets: crops dip as freeze doubts set in

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US crops took a turn for the worse, as profit-taking emerged, setting course for what may be, in Chicago speak, a "turnaround Tuesday".

A strong movement on one day is often followed by some kind of reversal on the next. But that pattern is particularly strong over Mondays to Tuesdays, according to a traders' adage.

This time, with Monday producing startling gains, the adage might foresee Tuesday being a profit-taking day.

And that's what it looked like in early deals, with some doubts emerging too over the weather threats which have been a primary impetus behind the rally in prices over the last week.

'Additional freezing'

The US actually faces two weather challenges – frost in some areas, to damage immature autumn-harvested crops, and rain in others, which has hindered the harvest already underway.

The rain, at least, appears to be waning. Meteorlogix forecast the frost remaining, with temperatures "below to much below normal" for the rest of the week in the Midwest.

"Additional freezing temperatures are expected during the next five days", it said, adding that "some damage to the immature [corn] crop is likely".

However, the rain looks set to die down. "Freezing temperatures but drier conditions over the weekend into next week will improve conditions for crop dry down and harvest," Meteorlogix said.

'Terrific sale price opportunities'

Even then, there is some doubt as to exactly how much damage the frost will cause.

EHedger, the Chicago broker, said after Monday's rally: "We think we're overdoing it to the upside right now and feel that the current strong prices represent terrific sale price opportunities."

Chicago corn for December eased 4.25 cents to $3.77 a bushel at 06:10 GMT, with December wheat down 6.25 cents at $4.88 a bushel.

November soybeans were 11 cents lower at $9.88 a bushel.

Catch-up

Still, across the oceans, crops did a better, largely playing a bit of catch-up with Monday's 5%+ Chicago gains.

Paris wheat for November added E0.25 to E128.00 a tonne.

In Kuala Lumpur, palm oil added 24 ringgit to 2,171 ringgit a tonne. Firm export data on Monday were also credited has helping prices, along with a rise in crude oil, which was also helped by the US cold snap for thoughts of rising heating oil needs.

By Agrimoney.com

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