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Morning markets: crops edge forward, even amid euro worries

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Soybeans

maintained their steady rally, even in the face of rough economic conditions which left many risk assets in negative territory.

Fears about how new governments in Greece and Italy will fare in efforts to stem the countries' debt crises (Italy on Monday paid a euro-era record yield of 6.29% to get a E3bn auction of five-year bonds away) kept financial market sentiment subdued.

Asian

stockmarkets

were broadly weaker, with Tokyo shares closing down 0.7%, and Seoul stocks down 0.8%.

And while the

dollar

was little changed, many commodities were lower too, with

copper

losing ground while New York

crude

was flat as of 08:40 GMT.

'Excellent inspections'

But soybeans were 1.2% higher at $11.91 ¾ a bushel for Chicago's January contract, in its first full day as the spot lot, looking for a third successive positive close.

Some of the strength was attributed to forecasts for rain to slow the close of the US harvest of the oilseed.

"The US soybean harvest is now 96% complete, but the final push may be delayed by wet weather," Luke Mathews at Commonwealth Bank of Australia noted.

But there were also continued cheer at Monday's US export data, which in showing soybean cargo inspections at 53.5m bushels, handsomely beat expectations.

"Inspections for soybeans were excellent," Mike Mawdsley at Market 1 said, it noting that the figure still left the pace so far in 2011-12 3.5% behind the five-year average.

'Tad of positive news'

It was a second piece of firm US soybean export news, too, after decent export sales data unveiled on Thursday, raising ideas that the window of opportunity for the US may have begun in earnest, with supplies from the last South American harvest run down and the next ones not due until January at the earliest.

And this when there are indeed rumours of China, the top soybean buyer, going on the prowl for US supplies, and with hopes for Beijing's appetite raised by an estimate from Cofco of soybean imports of 58.5m tonnes in 2011-12, 2m tonnes ahead of the US Department of Agriculture estimate.

Ker Chung Yang at Phillip Futures in Singapore clocked "speculation that Chinese interest in buying US soybeans was picking up at lower prices".

Mike Mawdsley said: "China hinted their soybean imports will be larger this coming year and there is a hint of a drier pattern for Argentina, thus a tad of positive news for soybeans."

'Could be further pressured'

Corn

staged a bit of a recovery, adding 0.3% to $6.35 ¼ a bushel for December delivery, amid ideas of investor interest at these lower prices too, with US regulatory data overnight (a day late because of Veterans' Day on Friday) showing a continued rise in speculative interest in the grain.

"Corn continues to attract investor attention, with net long speculative positioning increasing for the fourth consecutive week," Paul Deane at Australia & New Zealand Bank said.

Not that there aren't reasons for caution, with Argentina unveiling an extra 400,000 tonnes in corn export permits, and some weak technical signals too.

Chicago's December corn is "breaking the lower bound of the 14 period Bollinger band with MACD [moving average convergence/divergence] crossing down into negative territory", Lynette Tan at Phillip Futures said.

"Without any strong supportive demands or lack of supply, corn could be further pressured into the end of 2012."

'Continue to profit'

It was

wheat

which took the position at the rear of Chicago's big three, easing 0.2% to $6.14 ½ a bushel for December delivery.

It gained something of a lift from its atypical discount to corn, but a potential headwind from the regulatory data overnight showing that speculators had covered considerable short positions,

"Funds reduced short positions in Chicago by 12,000 to 36,291 contracts net short," Brian Henry at Benson Quinn Commodities said.

That could be a headwind if it creates scope for speculators to layer in more short positions, as they often appear fond to do, saving their long positions for Minneapolis spring wheat, whose price is being supported by thin supplies besides the global theme of shorter supplies of higher protein wheat.

"Inter-market spreaders do not want to hold a short position in Minneapolis and traders that are long Minneapolis against the other markets continue to profit," Mr Henry said.

'Sentiment is improving'

Elsewhere, New York

cotton

for December remained strong, adding 0.9% to 101.70 cents a pound, amid talk that a trading house was preparing to take a large delivery against the futures after they start their expiry process, next week.

But the rally in Kuala Lumpur

palm oil

stalled, with the January lot standing 0.3% lower at 3,186 ringgit a tonne, if only after rising above 3,200 ringgit a tonne earlier for the first time since June.

"Palm oil sentiment is improving, despite the macroeconomic outlook, due to lower production expectations from the fourth quarter, as dominant South East Asian producers enter the rainy season," Mr Ker said.

And

rubber

added 0.2% to 273.50 yen a kilogramme in Tokyo, amid signs of some stabilisation in that market, for now at least, following steep declines fostered by Thailand's floods, which have disrupted car manufacture in the country and beyond.

Several Thai rubber dealers and growers have stopped offering rubber raw material "at 'abysmally' low price", Mr Ker said, also noting that the industry's Tripartite Council (of Thailand, Malaysia and Indonesia) is to hold a meeting on Saturday to halt the drop in rubber prices.

That has "provided psychological support" to futures.

By Agrimoney.com

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