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Morning markets: crops join financial market slide

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Food commodities set off the week on a weak note, undermined by a stronger dollar, sagging economic hopes, and prospects of good US growing weather.

The dollar added 0.3% against a basket of major currencies – making US exports such as crop more expensive abroad - as renewed fears for the global economy sent investors running back to what has been regarded as a safe haven during the global recession.

These fears weighed on other markets too, with Tokyo shares closing down 3.1% at Shanghai stocks slumping 5.8% at 06:30 GMT to their lowest since late June.

Oil, meanwhile, slid 1.6% to $66.44 a barrel for New York crude for September.

Benign weather

In Chicago, soybeans were the worst hit, slipping 1.7% to $10.07 a bushel for September and 1.4% to $9.67 ¾ a bushel for the better-traded November contract.

Weather forecasts show that the crop is set for rain and heat across major growing areas, just what soybeans need as they continue the sensitive pod-setting process.

The crop also suffered a continuing hangover from data on Friday showing poor demand from crushers in the US and surprisingly-large deliveries on Chicago's expiring August contract, taken as a sign that the market may not be as tight as investors had thought.

September corn, meanwhile, was 1.2% lower at $3.15 ½ a bushel, with wheat for September down 0.7% at $4.78 ½ a bushel, within 5 cents of its 2009 low.

December wheat, for which volumes were higher, stood 0.7% lower at $5.06 a bushel.

Export data

Weakness was the theme in Kuala Lumpur too, where benchmark November palm oil dipped 1.9% to 2,391 ringgit a tonne in morning trade on the Bursa Malaysia Derivative Exchange.

Weak prices of soybeans, the source of rival vegetable oil soyoil, were part of the reason that investors were tempted to take profits. Palm oil still remains nearly 22% above a mid-July low.

Soft export data did not help the cause, with Intertek Testing Services, the cargo surveyor, pegging Malaysian shipments at 665,000 tonnes in the first two weeks of the month, up just 0.9% month-on-month despite the following wind of the forthcoming Asian festival season.


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