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Morning markets: crops head for bumper month

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Food commodities edged higher on Friday, looking for a positive finish to what has been in the main a positive month, thanks to funds' growing appetites.

It hasn't just been agriculturals which have benefitted. Benchmark New York crude was, at its price of $65.37 a barrel at 06:15 GMT, up 28% on the month, its biggest monthly gain in more than a decade.

Traders have credited the rise to improving sentiment on the global economic outlook following a series of (relatively) upbeat reports. The latest, showing US petrol stocks down for a fifth successive weak, helped crude's $0.29 a barrel gain on Friday.

Such positive sentiment is much of the reason crops have improved so far too. Many investors are seeking to invest in assets, such as commodities, likely to rise to rise in price should inflation kick off again.

'Downward correction'

Palm oil has been a main gainer, despite a sideways performance over the last week, with gains on Friday's morning session in Kuala Lumpur limited to 18 ringgit, taking the August contract to 2,523 ringgit a tonne.

"People are talking about a double-digit growth in production, so a lot of improvement in supplies is coming," a trader told Reuters, the news agency.

"Buyers are not rushing to buy. I think there should be a downward correction in prices."

Still, over the month, palm is 26% higher.

Sweet for wheat

Turning to Chicago, wheat has been the major gainer, helped by fears that slow planting of the US spring crop and a freeze-damaged winter wheat harvest will curb production.

On Friday, it added 4 cents to $6.34 ¼ a bushel for July delivery, taking gains for the benchmark contract to nearly 21% for May, its best month for more than two years.

Corn is close behind. Its 0.5 cent improvement this morning took its price to $4.29 ½ a bushel, 18.5% up on the month.

Corn has, as a major feedstock for biofuel, been helped by the rise in oil as well as problems in planting which many traders believe may see farmers switch to soybeans.

Soybean rumours

Soybeans, despite garnering much of the media attention, have actually gained a relatively modest 10.3% for May, including today's 1.25 cent uplift to $11.80 ¼ a bushel.

While briefly retaking the $12-a-bushel a mark earlier this week, soybeans have been dogged by persistent rumours of cancelled shipments to China, whose purchases have been a major factor in supporting prices.

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