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Morning markets: crops retrench as report looms

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Food commodities went into reverse on Tuesday as the dollar rebounded marginally from 15-month lows, leaving crops without the fuel for their strong rally in the last session.

One euro was worth $1.4980 at 07:15 GMT, having topped $1.50 on Monday.

A more expensive dollar is unhelpful for prices of US exports, such as crops, making them less competitive.

The prospect later of the US Department of Agriculture's much-watched monthly crop supply and demand report also tempered sentiment. The USDA's November report, based to a greater extent on actual corn and soybean data rather than subjective criteria, is viewed as difficult to predict.

The slowest US corn and soybean harvests since at least 1984 have made this report especially tricky.

"With harvest pace so far behind, especially in corn, it is hard to tell what the USDA will say," Justin Kelly, at US broker eHedger, said.

Harvest progress

That said, US farmers made strong progress last week, completing 12% of the corn harvest and 24% of soybeans. Growers in Illinois, America's second-biggest soybean state, harvested 34% of their crop.

That gave investors an extra excuse to sell – to take some of the risk premium out of the market.

Corn dipped 5.25 cents to $3.80 ¾ a bushel for December, with November soybeans easing $9.60 ¼ a bushel and the January contract down 3 cents at $9.69 a bushel.

For wheat, Chicago suffered worse than Kansas. Chicago's December contract lost 6.5 cents to $5.13 ½ a bushel, with its Kansas equivalent down 3 cents at $5.18 ¾ a bushel.

This may be a sign of selling by speculators, who push far greater volumes through Chicago, or the progress in winter wheat plantings also highlighted in Monday's USDA crop progress report.

The soft red winter wheat traded in Chicago has suffered greater planting delays, largely due to corn and soybeans remaining in the field, than the hard red winter wheat.

Canada dry

Another factor weighing on wheat prices was strong progress in the Canadian harvest, which has been too running late.

"Excellent late-season weather allowed farmers to make significant harvest progress last week," the Canadian Wheat Board said.

"Spring wheat is now 97% complete, durum is 99% complete, and barley is 98% complete. Continued favourable weather this week is expected to allow farmers to continue harvesting remaining fields."

Palm stocks jump

In Kuala Lumpur, palm oil lost morning gains on data showing Malaysian stocks had risen by more than the market had expected.

The Malaysian Palm Oil Board said inventories in the world's second biggest palm producing state jumped 25% to 1.97m tonnes last month, their highest for 10 months.

The benchmark January palm oil contract stood down 18 ringgit at 2,248 ringgit a tonne on the Bursa Malaysia Derivatives Exchange, 37 ringgit below its day high.

By Agrimoney.com

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