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Morning markets: crops poop party for Dubai rescue

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Crops weakened in early deals on Monday, despite the celebrations in many other markets at the bailout of troubled Dubai.

Abu Dhabi handed $10bn to its fellow emirate as a $4.1bn bond owed by property developer Nakheel fell due.

Dubai said that the balance of Abu Dhabi's injection would be used for interest payments on its remaining debt and for working capital until May next year, but on condition it reached a standstill agreement on its outstanding distressed debt pile of more than $20bn.

The news helped many stock markets, notably Dubai's, which jumped 10%, while Hong Kong's added more than 1%, and Shanghai shares were 1.7% higher at 07:30 GMT.

But while an improved appetite for risk also weakened the dollar a touch, making US exports such as food commodities more competitive, Chicago crops failed to take the bait.

Loss estimates

Profit-taking was considered one reason, after a better performance by corn at the end of last week on harvest concerns.

Much of America's outstanding crop remains covered in a blanket of snow, leaving a long-delayed harvest even more behind and potentially leading to crop losses too.

"Analysts have been speculating ever since as to how many acres of corn to be harvested has been stranded in the field and what if any that will equate to in terms of final field loss for this crop year," Jon Michalscheck at Benson Quinn Commodities,said.

"Some private [analysts] have indicated the loss estimate could eventually run into the 100s of million bushels."

Position changes

Other observers, meanwhile, see the snow merely as a delaying factor.

Indeed, the big funds were big sellers of the crop in the week to December 8, liquidating 33,900 contracts.

Still, with commercial investors adding 33,700 lots, there looked pressure for bargain hunting too.

"The roughly 170m bushel equivalent that the commercial covered may have been an indication that demand… picked up on the break in prices," Mr Michalscheck said.

Corn for March stood 1.25 cents lower at $4.03 ¼ a bushel, with the December lot down 3.75 cents at $3.85 ½ a bushel in its last hours before expiry.

Crush data

With weakness in corn, which has led the way in Chicago of late, some softness in other crops was hardly a surprise.

Wheat eased 3 cents to $5.34 ½ a bushel for March delivery.

Soybeans were down 2.75 cents to $10.32 ¼ a bushel for January, ahead of key data due later on America's soybean crush for November.

Investors are expecting a crush figure just short of 155m bushels, and a soyoil stocks estimate of 2.35bn pounds.

Regulatory data showed funds have been sellers of soybeans, while commercial traders reduced short positions.

Palm slips

In Kuala Lumpur, palm oil renewed its slide, after a marginally positive close to the last session,

A soft crude market was blamed for the decline, along with some uncertainties ahead of data on Tuesday on Malaysian palm exports.

The benchmark February contract stood 16 ringgit lower at 2,514 ringgit a tonne on the Bursa Malaysia Derivatives Exchange.


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