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Morning markets: crops retreat as dollar advances

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December 29 took on a hint of that Turnaround Tuesday feel, with a firm dollar encouraging crops to give back some of the ground made in the last session.

The Turnaround Tuesday, in which crops reverse a strong trend on a Monday, is part of Chicago trading lore.

And it gained a little traction this time, with prices in all the big three – corn, soybeans and wheat – a little easier in Asian trading hours.

Nonetheless, it was difficult to detect too as of yet to detect much more than a stronger dollar at work.

The greenback strengthened against a basket of foreign currencies, making US exports such as crops less affordable. Against the euro, the dollar stood at $1.4415 at 08:00 GMT, in line with Christmas Eve levels.

Harvest news

Indeed, some factors remained in crops' favour, with soybeans rising 1.1% to set a year-high on China's Dalian exchange. Soyoil was 0.8% higher too.

Prices in China have taken on greater significance with the country's ascent to becoming by a distance the world's biggest importer of soybeans.

Meanwhile, wheat had the support of an 800,000-tonne cut by CBH Group to its grain harvest estimate for Western Australia, Australia's biggest grain-producing state.

That was some balance to reports over the weekend that Russia is poised to start releasing 4m tonnes of its huge wheat reserves onto the market, at prices well below the grain was bought at last year.

'New money'

Still, it is technical factors that appear to have regained ascendancy, some traders said, with renewed talk of the fund buying that is expected to take place in the New Year by funds, thanks to fresh money and, it is thought, a switch out of energy into crops.

"New money and a reallocation that will favour the agriculture sector have funds rumoured to be buyers of over 20,000 contracts during the first half of next month," Jon Michalscheck, at broker Benson Quinn Commodities, said.

Investors may also have an eye on support levels and ceilings, after Monday's rally took March wheat dance with its 50-day moving average, of $5.48 a bushel.

The contract stood 4.5 cents lower at $5.46 ¼ a bushel at 08:00 GMT, with March corn down 1 cent at $4.15 a bushel.

Soybeans for January eased 3.25 cents to $10.25 ¾ a bushel.

'Not aggressive sellers'

In Kuala Lumpur, palm oil put in a more robust performance, adding 24 ringgit to 2,616 ringgit a tonne.

The stronger Chinese price of soyoil, palm's major competitor in vegetable oil markets, helped, as did a dearth of selling by plantation owners.

"Producers are not aggressive sellers with current level as they are comfortable with their inventories level while buyers are biting hand to mouth only," a trader told Reuters, the news agency.


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