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Morning markets: crops ease as data barrage nears

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Farm commodities opened the last day of the quarter on a weak note, amid investor nerves ahead of some of the most closely-watched data of the year.

The data is that from the US Department of Agriculture on farmers' planting intentions, which is being double billed with crop inventory estimates for March 1. (There are some smaller reports, eg cash rents, due too.)

And the potential for them causing large swings in crop prices is huge.

Potential price reaction

"A bearish report could easily push prices back towards contract lows ($3.50 [a bushel ]for December futures) ahead of planting," Justin Kelly at broker eHedger said.

"A bullish surprise could easily help prices rally back towards the high-end of the recent range ($4.15 [a bushel] for December futures). Either way, expect a volatile trading session."

Technical analysis told Market 1's Mike Mawdsley that $9.77 ½ a bushel, some 3.5 cents above Tuesday's close, was crucial for soybeans.

"If May beans fail to close over $9.77 ½ we could see selling hit the pits and bring the market back down to $9.20-9.25 [a bushel]," he said.

Strikes and disease

Soybeans were not looking so positive in early deals, with the May lot down 2 cents at $9.72 a bushel at 07:00 GMT.

Besides report worries, some investors are concerned that the Argentine dockworkers' strike, in support of a doubling of pay, which has crippled crop shipments from the world's third biggest soybean exporter, may be resolved now that the government is involved in mediation.

Thoughts of Argentine exports being hampered had provoked thoughts of extra demand for US soybeans.

Also Agroconsult, the crop consultancy, didn't help by adding 2.9m tonnes to its forecast for the Brazilian crop, taking it to 68.0m tonnes, 1.0m tonnes above the latest USDA estimate.

Nor did reports of foot and mouth in China's Gansu province, the third outbreak this month, and viewed as potentially causing restrictions on feed-crop imports to the world's biggest soybean consumer.

Black Sea 'defaults'

Still, in percentage terms, soybeans were doing better than corn, which slipped 1.5 cents to $4.53 for May delivery, and wheat, which stood down 4.25 cents at $4.67 ¾ a bushel, losing more than half its bounce from short covering in the last session.

Not that all the news on wheat is bearish.

"Rumors abound that there have been defaults on Black Sea shipments of wheat," Kevin Kjorsvik at Benson Quinn Commodities said.

"Exporters have had difficulty buying wheat from the interior and that even some of the Ukrainian wheat has not met contract specifications.

"Black Sea offers have firmed recently and traders are pointing to these export problems as the reason."

These "problems" are also being credited for a rebound in Paris and London futures.

'Mixed' condition

Meanwhile, the condition of US soft red winter wheat, the type traded in Chicago, is "mixed", Mr Kelly said, not that he was bullish over prices.

"Global supplies continue to undercut US prices and weigh on export demand," he said.

"Until these large global supplies are cleaned up, it could be difficult to stage any sort of wheat rally."

Palm exports

In Kuala Lumpur, palm oil was also a touch lower, easing 10 ringgit to 2,535 ringgit a tonne.

Weaker prices of soyoil, palm oil's biggest rival in the vegetable oil markets, on China's Dalian exchange were viewed with particular alacrity, given the foot and mouth outbreak.

Export data were good, if within forecasts, with Intertek Testing Services estimating Malaysia's palm exports up 12.1%, while Societe Generale de Surveillance pegged the rise at 7.7%.


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