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Morning markets: crops pause as dollar stabilises

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The rally in crop prices fuelled by strong US economic data petered out in Asian trading hours, as the dollar stabilised and the prospect remained of decent harvesting weather in the US.

Investors' renewed appetite for risk abated somewhat as investors turned to the next set of US economic data for confirmation of how far out of the woods America really is.

Friday will bring University of Michigan consumer sentiment survey for October and the Institute of Supply Management Chicago's October index for manufacturing activity.

The dollar stabilised, denying export goods such as crops the support of a cheaper currency, which makes them more competitive purchases.

While shares continued to rise, with Tokyo's Nikkei index rebounding 1.4% to close back above 10,000 points, that was a matter of playing catch up after Thursday's 2% gains on Wall Street.

EU exports flag

What news on fundamentals appeared overnight was of modest significance, in sentiment-changing terms.

Weekly data showed the European Union clearing 229,000 tonnes in wheat exports, the lowest figure since for nearly three months.

Forecasts remained pretty decent for the US corn and soybean harvests, which are running at their latest since records began in 1985, thanks largely to persistent rain.

Meterologix's forecast for the Midwest said: "Rains again slow the harvest down during the next few days, especially south and east areas.

"The outlook for next week is more promising as it looks to be mostly dry and possibly much warmer."

December wheat added 0.25 cents to $5.04 a bushel in Chicago, as of 07:40 GMT while corn lost 2 cents to $3.77 ½ a bushel.

Soybeans eased 4.75 cents to $9.80 ¾ a bushel.

Production expectations

In Kuala Lumpur, palm oil also eased, although not by much, amid lingering concerns over a rise in stocks in Malaysia, the world's second biggest producer of the vegetable oil.

According to Reuters, traders expect Malaysian exports for October to hit 1.2m tonnes, but forecast stocks rising to 1.65m tonnes thanks the rise in production which typically occurs towards the end of the calendar year.

There had been thoughts over the summer that drought stress, after last year's bumper crop, coupled with potential weather damage should El Nino strike hard would depress yields.

The benchmark January palm oil contract closing the morning session on the Bursa Malaysia Derivatives Exchange down 9 ringgit at 2,180 ringgit a tonne.


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