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Morning markets: crops remain under the cosh

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Bears maintained their grip on crops, in particularly on vegetable oil varieties, as concerns about the global economic revival continued to cloud the investment horizon.

Most Asian share markets traded lower, with Tokyo stocks ending down 2.4%. The notable exception was Shanghai, where shares recovered from a poor start to stand 0.5% higher at 06:15 GMT.

While oil recovered some ground, up 0.8% at $68.58 a barrel for New York light crude, October delivery, that was down to specific data showing a decline in of 3.2m barrels in US crude stocks last week.

Economic statistics of broader influence, US unemployment figures for August and July factory orders, will be released later.

Record crops

In the meantime, crops ploughed the same furrow as they did on Tuesday, with soybeans setting course for a third day of losses.

While Oil World forecast that prices would come under pressure in the new year, as record Brazilian and Argentine harvests came into buyers' sights, investors appear to have been booking their losses in early.

At $10.08 ½ a bushel, Chicago's September bean contract stood 5.5 cents lower on the day and 13.4% below a high hit on Friday.

New crop November soybeans lost 8 cents to $9.47 ½ a bushel, within 1% of their lowest for more than a month.

Fair weather

Besides prospects of big harvests in the Americas, sentiment for soybeans has also been soured by a report that Chinese regulators are to allow state-owned buyers to default on commodity derivatives contracts.

Weather also remains good for the US crop, with Meterologix forecasting "generally favourable conditions for pod setting and filling soybeans through the Midwest, with adequate rainfall in most areas.

"Cool weather further delays development early this week, but it will warm up later this week."

In Kuala Lumpur, soyoil rival palm oil was also dragged lower, with reports showing a decline in Malaysia's palm exports in August also damaging sentiment.

The benchmark November contract ended the morning session on the Bursa Malaysia Derivatives Exchange down 52 ringgit at 2,251 ringgit per tonne.

Grains slide

Back in Chicago, grains were also out of favour, with US corn crops helped by the same weather which was boosting soybeans.

September corn slipped 2 cents to $3.10 ¼ a bushel, with the better-traded December contract down 2.25 cents at $3.17 a bushel.

December wheat lost 1.75 cents to $4.85 ½ a bushel, remaining within 5 cents of the 2009 low for a nearest-but-one contract.


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