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Morning markets: crops provide Christmas cheer

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Crops did their best to make it a happy Christmas, for farmers and investors with long positions at least, by rising in early deals, helped by a further backward step by the dollar.

Indeed, external markets continued the somewhat Scrooge-free performance seen in the last sessions.

Shares traded higher, with Tokyo's Nikkei index closing up 1.5% at a three-month high, while Shanghai stocks were 2.4% to the good at 06:30 GMT.

Oil maintained its upward path too, adding 1.0% to its best for nearly three weeks, helped by Wednesday's data showing a bigger-than-expected fall in US crude inventories. Oil is a key signal for prices of crops, many of which are used in making biofuels.

The dollar, meanwhile, continued to soften a touch, if remaining well above its early-month lows, standing at $1.4354 against the euro, 1.5 cents or so above Tuesday's low. A weaker greenback makes dollar-denominated assets, such as crops, more affordable.

Dalian progress

As an added bonus for soybeans, Chinese bean prices rose too, by 0.8%.

The comings and going of the Dalian exchange have been much-watched of late as an indicator of market pressures in China, the biggest buyer of US soybeans, but which is soon to have a bigger choice of imports, given the South American harvest starting next month.

Still, given Wednesday's upbeat US soybean export news, with daily reporting of 367,000 tonnes of sales to China, Italy and unknown, there was maybe no need to get too concerned for now.

January soybeans added 6.75 cents to $10.08 a bushel, with the better-traded March contract up 7 cents at $10.18 a bushel.

'Weakest link'

Even products joined in the rally, again helped by Dalian soyoil, which stood 0.9% higher.

Chicago soyoil stood 0.8% higher, with soymeal adding 0.4%

There had been fears of some fallout from Wednesday's US crush data which, while showing record high soybean processing – good news – also revealed that much of the produce was being stored rather than sold – bad news.

Soymeal stocks soared to the highest since 1996 at 633,706 short tons, 187,000 tons higher month on month, with soyoil stocks also jumping despite of yields hitting their lowest for eight years.

"The soyoil market is now the weakest link in the complex," Kim Rugel at Benson Quinn Commodities said, noting the Senate's failure to renew a $1-a-gallon tax credit on biodiesel which expires at the end of the month.

Palm revives

Investors in Kuala Lumpur palm oil, soyoil's biggest rival, may have had some sympathy with the notion of weakening vegetable oil prices, to judge by performances earlier in the week.

But the benchmark March contract regained some ground, standing 31 ringgit higher at 2,531 ringgit a tonne.

The rising price of crude oil, as well as the Dalian soyoil prices, was credited as particularly significant.

Key data

The cheer spilled over into grains too - a little – with corn consolidating its position above $4 1 a bushel.

Chicago's March contract added 1.25 cents to $4.06 a bushel.

Wheat for March was 1 cent higher at $5.30 a bushel.

Still, the mood could still be changed by US export sales data due later. Markets are expecting 0.95m-1.25m tonnes for soybeans, 550,000-750,000 tonnes for corn and 350,000-550,000 tonnes for wheat.


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