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Morning markets: crops make brisk start

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Food commodities got off to a flying start to the week - and month - aided by the general improvement in economic sentiment and growing concerns about US weather.

The dollar hit its lowest point this year against a basket of foreign currencies as hopes revived that the global economic revival was accelerating.

The boosted crops traded in dollars, at least, by making them cheaper abroad.

However, the return of crude back above $70 a barrel helped all crops used as biofuels, including palm oil which jumped 4% in Kuala Lumpur.

Holiday help

Palm was playing a bit of catch up after lagging its rival in the vegetable oil market, soybeans, which rocketed at the end of last week on news of a huge Chinese order from America.

Asia's holiday season is deemed supportive too, strengthening demand for food. Even Ramadan, the Muslim holy month, involves feasting as well as fasting, and tends to put some pressure on production too.

Benchmark October palm oil closed the morning session on Bursa Malaysia's Derivatives Exchange up 94 ringgit at 2,283 ringgit a tonne.

Weather fears

That outpaced even a brisk start in Chicago, where soybeans for August stood 2.3% high at $11.64 a bushel, taking their recovery since a mid-July low to 20%.

Indeed, benchmark beans now stand nearer the year high, reached in mid-June, that than the three-month bottom set three weeks ago.

Besides the exports factor, beans are also beginning to get support from concerns from concerns about US weather.

Relatively cool mid-summer temperatures, which had been viewed as something of a blessing for farmers, may have been too cool, delaying the development of an already backward crop. And the longer it is in the field in autumn, the biggest the risk of frost damage.

Parts of the MidWest are suffering a shortage of moisture too.

Corn concerns

The same concerns lifted corn, which added 8 cents for September to $3.47 ½ a bushel.

The contract has now recovered 14% from a 2009 low set two weeks ago.

Meanwhile wheat added 6 cents to $5.34 ¼ a bushel for September, helped by the weaker dollar.

By Agrimoney.com

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