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Morning markets: crops mark time, as announcements loom

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The reduced volatility seen on financial markets in the last session, when indeed the Vix volatility index closed below 18 for the first time since July, continued into this one.

Assets struggled for movement of 1% or more.

Shanghai

shares

came close, adding 0.8%, but most stock indices were up or down 0.5% or less.

The

dollar

was down, but by all of 0.03%, against a basket of currencies as of 08:30 GMT, while Brent

crude

was 0.08% lower, failing to secure $112 a barrel.

'Marketing year high'

And agricultural commodities found activity difficult too.

Cotton

was doing well to gain 0.9% to 95.01 cents a pound in New York for March delivery, continuing to gain support from US weekly export data which while showing a huge batch of order cancellations from China, the top importer, revealed the best actual exports since April.

"Exports of 387,000 bales in the week were a marketing year high, with the main destination China," Australia & New Zealand Bank noted.

And many investors have been counting on Chinese cancellations, given the spate in the last half of 2010-11.

Indeed, as National Australia Bank pointed out earlier this week, if China was to fulfil all its order promises, it would leave the US cotton balance sheet looking rather snug.

Data later

One factor overhanging financial markets is the prospect of US jobs data later.

US non-farm payrolls are expected to rise by about 150,000, following a 200,000 increase last month.

Data out already on Friday has been mildly disappointing, with China's services sector doing the opposite of manufacturing and decreasing activity last month, with a purchasing managers' index falling to 52.9 from 56.0.

Still, at least, in showing a figure above 50.0, it revealed growth at all.

Russian announcement

And grain markets have the prospect of a Russian announcement on export policy, after its pace of shipments appeared to leave the country on course to hit a ceiling to 23m-25m tonnes.

Russia, which banned exports completely for most of last season following a drought-hit harvest, is keen to maintain a level of grain stocks to avoid a shortage which could boost the price of bread besides costs to the domestic livestock industry it is attempting to nurture.

The country is currently a huge meat importer.

However, it is a provider of competitively priced (although getting less so)

wheat

for world markets too.

Many observers believe the government will raise the ceiling before curbs are imposed.

"It seems recent meetings with government officials in Russia will likely yield a new target, probably in the neighbourhood of 27m tonne, on total grain exports," Brian Henry at US-based broker Benson Quinn Commodities said.

Also due later are official Canadian statistics on grain inventories, and Informa Economics US crop estimates ahead of next US Department of Agriculture flagship Wasde crop report, due next week.

'Refresh soybean fields'

As for the weather, ideas of the cold snap in Europe and the former Soviet Union easing have found some opposition, as Agrimoney.com reported on Thursday, with WxRisk.com forecasting a return of cold next week after a weekend retreat.

And the chill is already seen provoking considerable damage to crops without snow cover, with UkrAgroConsult estimating that 40% of Ukraine's winter grains, or roughly 3m hectares, is at risk, with some 2-2.3m hectares of that potentially reseeded in the spring.

Where weather is seen definitely improving is in drought-struck Argentina, where the Buenos Aires grains exchange said late on Thursday that, while recent rains had blessed some farms more than others, "the accumulated millimetres of rainfall exceeded expectations, allowing for gradual replenishment of soils".

"Rains predicted for the seven days ahead could continue to refresh soybean fields in the northern and central parts of the grains belt while the southern part of the belt will see scattered showers."

'Left with vapours'

The rains will particularly help

soybeans

, which are later developing than

corn

.

And there was continued grousing too over the pace of US exports of the oilseed so far in 2011-12, with sales down nearly one-third so far, compared with the same period of 2010-11, above the 15% decline that US Department of Agriculture figures are factoring in.

And this at a time when South American harvests will soon bring rival supplies online.

"If one looks at the annual soybean export chart, you can easily detect that soybean business will soon head to South America and we are left with vapours," Mike Mawdsley at Market 1 said.

Bulls may be hoping for help from China when a trade delegation makes its annual visit to the US in mid-month. Last year, the China used the occasion to announce commitments for 11.0m tonnes of soybeans.

Prices edge higher

In soybeans' favour is a big technical point, with the oilseed standing just above its 100-day moving average, at $12.10 ½ a bushel for March, which will provide downward resistance

Chicago soybeans for March stood 0.1% higher at $12.18 ½ a bushel.

That was narrowly behind March corn, which added 0.2% to $6.44 ¼ a bushel, and March wheat, up 0.3% at $6.64 ½ a bushel.

By Agrimoney.com

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