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Morning markets: crops edge down as dollar revives

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Some signs set in of that "Turnaround Tuesday" feeling, when crops reverse the next day a strong trend on Monday, as the dollar turned modestly against further upward movement.

If Turnaround Tuesday is one part of Chicago tradition, "Money Monday" is becoming another, with speculative buying and short covering pushing corn up above $4 a bushel, and soybeans above $10 a bushel, by the close in the last session.

"The market has been up the first day of the week on eight out of the 11 weeks so far this crop year at an average of $.12 ½ [a bushel] and down only three of those weeks at an average of $.08 [a bushel],"US broker Benson Quinn Commodities said.

The dollar's marginal rise on Tuesday – up 0.1% against a basket of currencies – was one reason for crops to lose momentum. A stronger greenback makes US exports, such as food commodities, less competitive.

Harvest progress

If investors were looking at fundamentals – and it is not clear they are playing a leading role right now – Washington's latest report on the progress of the delayed US corn and soybean harvests may have disappointed some investors too.

The data showed 89% of soybeans in the silo, with the corn harvest picking up the pace to get beyond 50% complete.

That's 17 percentage points of the harvest, equivalent to more than 700m bushels, completed in a week.

And a drier spell at the end of this week will help further progress.

Vomitoxin cap

Also talking fundamentals, there is some excitement at the cap on vomitoxin levels that is to be inserted into Chicago corn contract small print following last week's scare over the damaging fungal residue.

CME Group, the market's operators, last year introduced limits of 3 and 4 parts per million on Chicago's soft red winter wheat.

Many traders expected CME Group to introduce a cap on corn with the December contract, introducing the potential for upsets when deliveries against the lot begin in two weeks time.

The lot dipped 2.75 cents to $3.99 ½ a bushel as of 07:45 GMT, with January soybeans down 4 cents at $10.06 a bushel.

December wheat was 4.25 cents lower at $5.58 a bushel.

Monsoon impact

Kuala Lumpur palm oil did better at maintaining a rally, setting a fresh 11-week high of 2,370 ringgit a tonne before retreating a little to 2,348 ringgit a tonne.

The improvement in prices is being driven by rains in Malaysia, the world's second largest palm oil producer, which is in its monsoon season.

Some investors are talking of production falling 25% from a multi-year high hit last month.


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