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Morning markets: crops ease as frost risk assessed

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Chicago crops gave back a little of their huge gains in the last session as investors considered how real US frost threats were, leaving Kuala Lumpur palm oil to take the limelight.

The freeze warning which sent corn 9% higher on Tuesday came from weather forecasters using a computer-based model, which predicted a cold snap hitting parts of the US Midwest late next week.

That could be particularly severe for this year's corn and soybean crops, given their delayed development, prompting many investors to close short positions which had been profitable ventures.

As of last weekend, 12% of America's corn crop was mature, and so relatively invulnerable to frost, compared with a long-term average of 37%, according to official data.

For soybeans, 17% was dropping leaves, a key signal for harvest preparations, against an average of 36%.

Question mark

However, forecasters are not unanimous, and nor do shorter-term outlooks appear worrying.

Meteorlogix forecast Midwest temperatures "near to above normal" up until the weekend.

Still, a drop of the dollar to a one-year low against a basket of currencies gave investors concerned that the threat had been overplayed a reason not to go in too hard.

A weaker greenback makes dollar-denominated assets, such as Chicago agricultural commodities, cheaper to foreign buyers.

Corn for December slipped 0.5 cents to $3.46 a bushel, with November soybeans losing 9 cents to $9.51 a bushel.

Wheat for December was 3.5 cents lower at $4.67 a bushel.

Wave reaches Malaysia

In Kuala Lumpur, the impact of Tuesday's rally reached palm oil to send prices of the benchmark December contract 3.7% higher

The prospect of a long weekend for the Muslim holiday of Eid al-Fitr acted as an extra encouragement for traders to cover short positions, with some talk going round the market of an improvement in Malaysian exports too.

Cargo surveyors on Tuesday reported shipments down 20% in the first 15 days of September.

The December contract closed the morning session on the Bursa Malaysia Derivative Exchange up 78 ringgit at 2,168 ringgit a tonne in heavy volumes.


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