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Morning markets: crops make soft start to week

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Shares gained on Monday. Oil ticked higher. But food commodities failed to pick up on the vibes, as weather remained benign for US crops.

Tokyo's Nikkei share index managed its ninth successive positive close, the longest winning streak in 21 years, and at one point touched a nine-month high. Other Asian markets made ground too.

That helped oil make ground, with New York crude for September 1.0% higher at $68.75 a barrel at 06:15 GMT.

'Crucial pollination stage'

Nonetheless, Chicago crops, which are struggle to put together any kind of winning run, remained overshadowed by the prospect of bumper yields, with corn notably weak.

"As [US corn] reaches the crucial pollination stage, temperatures in the Midwest are warm but not hot with regular showers," Hugh Schryver, at Glencore, said.

The prospect of a Chinese auction of 2m tonnes of the grain from state reserves on Tuesday also unsettled nerves.

While corn for September remained unchanged at $3.16 a bushel, some forward lots were less blessed. The May 2010 contract, for instance, shed 2.5 cents to $3.47 ½ a bushel, albeit in miniscule trade volumes.

Quality factor

Wheat showed the same profile, with the benchmark September contract down just 0.5 cents at $5.15 ¾ a bushel for September while May 2010 shed 4.25 cents to $5.70 ½ a bushel.

Plentiful global supplies have kept a lid on the grain's prices although, with potential rain damage to European crops and some fears of drought ahead for Australia, better quality wheats have been doing better than common

Soybeans did better, up 4 cents to $10.25 a bushel for August.

While China looks like a second attempt to sell down some of its stocks later this week, the failure of last week's auction has removed some investor jitters at the prospect of America's biggest soybean buyer turning seller.

Exports fail to impress

In Kuala Lumpur, palm oil was also a touch lower, following data from cargo surveyor Intertek Testing Services saying that Malaysian exports of the vegetable oil and its products rose 9.9% to 1.11m tonnes in the first 25 days of July.

Many traders had hoped for better given the forthcoming Asian festivals period, typically viewed as a bullish factor for demand.

The benchmark October contract on Bursa Malaysia's Derivatives Exchange dipped 23 ringgit to 2,099 ringgit a tonne in the morning session.

The session ended before Societe Generale de Surveillance, another surveyor, reported Malaysian palm oil exports up 10.3% to 1.08m tonnes in the July 1-25 period.

By Agrimoney.com

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