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Morning markets: dollar and oil help crop revival

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Crops got back on the front foot on Friday, helped in the US by fresh declines in the dollar and some spillover support from the oil market, although palm oil took the honours by jumping nearly 3%.

The weather forecast remained better for the US corn and soybean harvests this weekend, a factor which depressed prices in the last session. There will a window of dry weather among some areas, such as the Delta, where heavy rain has slowed the process.

Not that the weather could exactly be described as benign throughout US growing regions. Meteorlogix forecast that "the weather pattern will remain unfavourable for crop dry down and harvest throughout the Midwest.

"Freezing temperatures in the west could have damaged any immature crop."

Dollar and oil

The dollar chipped in by sinking to a fresh 14-month low against the euro, which hit $1.4968. A weaker greenback increases the competitiveness of US exports, such as crops.

And investors also turned to the rising oil prices, which neared $80 a barrel for the first time since October last year.

The appreciating oil price has been one reason for a surge in ethanol prices, which have not retreated far since on Monday jumping 7.6 cents to $1.90 a barrel.

Ethanol factor

Strong ethanol prices are a support in particular for corn, a major feedstock, although wheat is used in many processing plants.

Chicago corn for December added 2 cents to $3.75 a bushel, while December wheat was 3 cents higher at $5.08 a bushel. The Kansas equivalent added 2 cents to $5.20 a bushel.

Chicago soybeans recovered 7 cents to $9.90 a bushel.

Exports jump

That was, um, chicken feed compared with its vegetable oil rival palm oil, which added 2.7%, or 56 ringgit, at one point.

Besides the rising crude price, traders took heart from rising Malaysian exports, which added more than 10% in the first 10 days of the month.

The ringgit also chipped in by breaking a rally against the dollar.

Benchmark January palm oil closed the morning session on the Bursa Malaysia Derivative Exchange up 44 ringgit at 2,155 ringgit a tonne.


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