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Morning markets: crops return to back foot

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Crops returned to the back foot on Wednesday, as traders mulled the impact of a cold snap which may hit US growing areas next week.

The dollar provided some support, setting a fresh year-low against a basket of major currencies, so making US products, such as farm commodities, more competitive on export markets.

The New Zealand dollar was notably strong, surging to its highest for 13 months against the greenback after the country said it had come out of recession in the second quarter of the year.

But the dollar's weakness was not a cure all. Oil, a key indicators for crop markets, eased, sliding 0.4% to $71.45 a barrel in for New York light crude, November delivery.

Investors in Chicago crops continued to mull how real, and how dangerous, a forecast frost is.

'Outbreak of cold air'

The global forecast system (GFS), a computer-based weather prediction model run by America's National Oceanic and Atmospheric Administration, "is showing an outbreak of cold air into the north west corn and soybean belts as early as next Monday", Terry Roggensack at the Hightower Report said.

However, he added: "The GFS forecast has shown outbreaks of cold air in the 6-10 day timeframe on a number of occasions recently, but these have not resulted in an actual cold snap so far."

Meanwhile, crops, while delayed by late plantings, are looking less and less vulnerable to frost damage - particularly soybeans.

Latest Washington data showed 40% of the US soybean crop is now dropping leaves, a final stage in the maturation process, compared with 17% a week before.

China freeze

Still, where frost may help US soybean prices is if it damages crops Heilongjiang, the largest bean growing province in China, where continued cold temperatures are forecast.

Shipments of soybeans to China, the biggest buyer of the crop, slowed last month to 3.13m tonnes, down 29% on the record 4.7m in July.

Chicago soybeans for November stood 5 cents lower at $9.17 a bushel at 06:45 GMT.

December corn, which jumped 3% in the last session on frost fears, lost 2.5 cents to $3.23 ¼ a bushel.

December wheat slid 1.25 cents to $4.54 ½ a bushel.

Palm returns

Kuala Lumpur palm oil, meanwhile, returned a little under-the-weather from a long weekend.

The benchmark December contract slid 10 ringgit to 2,180 ringgit a tonne in morning trade, on light volumes.

Part of the performance was put down to many investors taking longer holidays, with soft export data also doing its bit.

Intertek Testing Services, the cargo surveyor said earlier in the week that Malaysian palm oil products for the first 20 days of September fell 2.1%, month on month, to 797,929 tonnes.

By Agrimoney.com

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