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Morning markets: crops follow oil lower

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Food commodities turned south on Thursday, in the absence of many fresh influences apart from negative ones.

Oil was again on the slide, with Brent crude down $0.34 at $57.00 a barrel by 06:15 GMT, following the warning from producers' cartel Opec that it remaining above $50 a barrel owed "more to sentiment than fundamentals".

Meanwhile, Tokyo shares closed down 2.6% and the dollar was a touch firmer too as investors rushed back to sanctuary.

Against that background, softness in Chicago soy was hardly surprising, especially after a run – particularly in old crop beans - which drove it seven-month highs, tempting many investors to book profits.

The spot month of May slipped 10 cents to $11.50 a bushel and July beans dropped 5.5 cents at $11.22 ¾ a bushel, although some forward contracts took the opportunity to close the gap a little. March 2010 added 2 cents to $9.85 a bushel.

That was no help to Kuala Lumpur palm oil, which many traders feel is becoming a little too expensive relative to soybean alternatives after hitting nine-month highs

Bursa Malaysia's benchmark July contract lost 55 ringgit, or 2.0%, to 2,734 ringgit a tonne in the morning session.

'Technical correction'

Back in Chicago, corn suffered the extra pressure of forecasts of better US sowing weather. July beans lost 3.25 cents to $4.23 ¼ a bushel, with forward contracts also lower.

But wheat was Chicago's worst performer, held back by the prospect of huge stocks as forecast by the US Department of Agriculture on Tuesday.

July wheat shed 6 cents to $5.82 ¼ a bushel, with the December contract down 7.5 cents at $6.30 a bushel.

Hopes of a revival later rest largest on US export data, with forecasts of up to 1m tonnes for corn, 650,000-750,000 for soybeans and 200,000-450,000 for wheat, according to Victor Lespinasse at GrainAnalyst.com.

"Some traders blame the need for a technical correction in wheat, corn and beans as the reason it has been a struggle to rally," he added, in comments late on Wednesday.

"We have had a sharp gain in July wheat and corn over the last several weeks and these pits might need a period of consolidation before going higher."

By Mike Verdin

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