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Morning markets: crops fret ahead of key data

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Food commodities succumbed to nerves ahead of Wednesday's big event – the US report on crop supply and demand – despite what appeared favourable conditions in external markets.

Oil started to build on the $70-a-barrel mark regained last night, helped by data showing a larger than expected fall in American stocks.

New York crude for July stood $0.76 higher at $70.78 a barrel at 06:05 GMT, with Brent up $0.61 at $70.23 a barrel.

The natural resources sector – albeit more mining than farming – was the star of the show in Tokyo too, where the Nikkei share index closed up 2.1% at an eight-month high, just shy of 10,000 points.

Waiting game

Chicago crops, however, eased a touch in thin volumes as investors awaited the US Department of Agriculture's June supply and demand report, of which a cut to official estimates of American soybean stocks is expected to be the highlight.

"I don't think any big movement will be taking place before the report," Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp in Tokyo, told Reuters.

"Speculators have already bought quite a bit, especially the soybeans and now we do need some additional factor for them to buy more. Any kind of weather scare is the biggest one."

July soybeans, which hit a nine-month high on Tuesday, slipped 2.5 cents to $12.41 a bushel, although new crop contracts appeared more in demand, with January 2010 beans up 5.25 cents at $10.84 ½ a bushel.

Wheat lost 1.5 cents of its latest rally, standing at $6.12 ¼ a bushel for July contract. Forward lots were also lower.

Corn continued its recent trend of avoiding the drama in other commodities, particularly wheat, which has witnessed wild swings. July corn stood 0.75 cents down at $4.43 ¼ a bushel.

'Bearish element'

In Kuala Lumpur, palm oil remained in listless form, adding 5 ringgit to 2,470 ringgit a tonne in the morning session.

However, that closed before the release of data showing an unexpected rise in Malaysian palm oil stocks, leaving many traders to predict losses in the afternoon.

"Everybody was expecting stocks to be lower so [the increase] is a bearish element," a trader said.

"Barring climatic problems, the market outlook is bearish. It may try to break 2,400 ringgit in the next few days."

By Mike Verdin

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