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Morning markets: crops sparkle as gold shines

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A renewed slide in the dollar, and a jump in gold to a record high, helped crops off to a firm start to the week.

Inflation fears sent the dollar down 0.5% against a basket of currencies, and to $1.4970 against the euro – while helping gold to around $1,166 an ounce.

Gold wasn't the only commodity to benefit from the combination of inflation concerns, which stoke demand for assets, and a weaker dollar, which makes those assets denominated in the greenback more competitive on export markets.

Oil gained 1.3% to $78.46 a barrel, as of 07:30 GMT, while food commodities were higher in both Chicago and Kuala Lumpur, with oilseeds once again leading the way.

Beans and palm

In Kuala Lumpur, palm oil jumped 1.9% to 2,464 ringgit a tonne for February delivery, helped by better sentiment regarding Malaysian exports and expectations of monsoon flooding as well as commodities' greater allure to investors .

Rains are expected to lower yields, as well as causing damage to plantations and hindering harvesting and transportation.

In Chicago, soybeans for January added 19 cents to $10.65 a bushel, reaching levels not seen since September 1.

Fund positions

Besides optimism over US exports, following strong data last week, beans are being boosted by some talk of European reforms to the region's policy of zero tolerance on imports containing unapproved genetically modified crops.

These curbs have left many shippers reluctant to handle US soybeans, mainly for fear that they are contaminated with traces of EU-unapproved GM corn.

The Commitments of Traders released late on Friday also helped, revealing a large jump, of 24,532 lots, in open interest in Chicago soybeans in the week to November 17.

Funds raised their net long positions, while commercial traders took the other side as selling pressure from farmers grew.

Mexican drought

Wheat also had some help from Commitments of Traders data, which showed traditional funds cutting their shorts on Chicago wheat by 10,000 contracts, and getting back into a net position on Kansas wheat.

December wheat stood 7.25 cents higher at $5.67 a bushel, while its Kansas counterpart was 8.25 cents up at $5.65 a bushel.

Corn, meanwhile, added 3.75 cents to $3.94 ¾ a bushel for December. Besides increased fund long positions, the grain has been helped by fears for Mexico's crop after the country bought 734,000 tonnes of US corn late last week.

Mexico's own corn production is forecast 2.5m tonnes lower by Washington for 2009-10 thanks, in a large part, to drought.


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