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Morning markets: dollar retreat steers crops ahead

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Crops trod cautiously ahead on Wednesday, helped by a better day for Chinese shares and some stability in oil.

Shanghai shares, whose bout of nerves undermined financial markets on Tuesday, stood 2.2% higher at 06:00 GMT.

That encouraged a retreat in the dollar, which investors have viewed as a safe haven during the economic downturn. This in turn improved the case for assets, such as commodities, denominated in the greenback, making cheaper to foreign buyers.

Oil stabilised at $72.05 a barrel, where it was left after a 3% fall in the last session.

Wheat sweeter

And Chicago crops managed small gains. Indeed, December wheat was confident enough to pop its head back over $5 a bushel, adding 2.25 cents to $5.01 a bushel. The September contract was 4 cents higher at $4.74 ¾ a bushel.

While the crop's fundamentals look weak, with the world blessed with ample supplies, traders said technical factors appeared to be working in wheat's favour for now, with support levels proving, indeed, supportive.

Indeed, in London, wheat moved back above £100 a tonne on Tuesday, in part because farmers were refusing to sell much below it.

Chicago wheat prices are also close to moving back above two-week moving averages, something of a buy sign for investors banking on "the trend is your friend" adage.

More averages

Corn, indeed, has already done so, after a 2.25-cent rise to $3.23 ¾ a bushel for the September lot and 2.75-cent improvement to $3.29 ¾ a bushel for December.

Still, favourable weather, improving the prospect of forecasts of huge yields being realised, are keeping a lid on prices.

Weather in the US Midwest will remain "generally favourable conditions for filling corn due to mild temperatures and rainfall" for the next few days, Meteorlogix said.

The forecasting group's comment on weather for soybeans was similar. "Generally favourable conditions for pod setting and filling soybeans through the Midwest with adequate rainfall in most areas."

September soybeans gained 5.5 cents to $10.98 a bushel, moving narrowly ahead of their two-week moving average, with the December contract remaining behind, despite a 6-cent rise to $10.05 a bushel.

Output question

Its Kuala Lumpur-traded vegetable oil rival, palm oil, had less luck, reaching noon local time unchanged at 2,355 ringgit per tonne on the Bursa Malaysia Derivatives Exchange.

Talk that Malaysian production in August would be flat, instead of falling as the market has expected, dragged prices down from an intraday high of 2,370 ringgit a tonne, traders said.

(For the record, even at that high, prices were below the, you guessed it, two-week moving average.)


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