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Morning markets: crops pause as US data digested

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Crops failed to move far in early deals on Wednesday, as the market continued to digest fresh US forecasts for supply and demand of major food commodities.

A major of the excitement of the morning was a slew of Chinese data, which initially sent the dollar a touch lower by showing a better-than-expected rise in industrial output and retail sales.

The greenback, a safe haven during the economic crisis, has tended to weaken on signs of global economic recovery.

However, it revived on separate statistics showing a fall in the pace of China's loan and investment growth, and weaker exports and imports than expected.

'Dollar always wins out'

What did this mean for crops? Allendale, the US broker, had an observation.

"In wheat, if you see the dollar moving, the appropriate action to take is to do the opposite.

"There is still no reason to be bullish this market but as always the dollar wins out over all in this market."

So the dollar moving sideways - a euro was worth $1.4990 at 07:30 GMT –set the backdrop was set for a slow market in wheat.

Chicago's December contract eased 2 cents to $5.21 a bushel.

This left it a cent above its close on Monday despite a key US Department of Agriculture report which, for wheat, was considered a little bearish, cutting the forecast for US exports and raising the estimate for year-end stocks.


Corn, while 0.75 cents lower at $3.94 ½ a bushel, appeared to be moving more in line with fundamentals. It was still up more than 2% since Monday.

The report was considered modestly bullish for corn, in trimming the forecast for the US harvest by more than analysts had expected.

Soybeans, meanwhile, added 4.75 cents to $9.66 ¼ a bushel for November, putting themselves in a narrow gain over the two days, despite a USDA report viewed as bearish in raising harvest hopes for major producers.

Oil-to-oil correlation

There was no such recovery for palm oil, which continued to toil under data showing a huge rise in Malaysian stocks.

Many observers have also pointed to a correlation between palm oil, which is used in biodiesel manufacture, and oil, which was a touch lower at just under $79 a barrel.

Kuala Lumpur's January contract stood 3 cents lower at 2,239 ringgit a tonne in early afternoon trade.


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