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Morning markets: freeze helps crops defy dollar

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Crops made a firm start to Wednesday as the market focus began to turn somewhat towards freezing weather in many growing regions, and despite a jump in the dollar.

The euro slid to $1.4285 against the greenback, down a full 2 cents from Tuesday's high, after Juergen Stark, executive board member at the European Central Bank, said that the European Union would not bail out Greece should it get into crisis.

"The markets are deluding themselves when they think at a certain point the other member states will put their hands on their wallets to save Greece," Mr Stark told Italian newspaper Il Sole 24 Ore.

Greece's sovereign debt was last month downgraded by all three major credit ratings agencies.

Unharvested corn

While a stronger greenback, which also rose against the yen, makes life hard for dollar-denominated assets such as crops, by reducing their competitiveness on export markets, Chicago crops managed to chalk up small gains.

Weather was some help, with an official estimate saying that about 30% of North Dakota's corn crop was yet to be harvested, and would most probably stay in the field over the winter because of deep snow, a reminder of the difficulties farmers have faced with the 2009-10 crop.

"If North Dakota's information is accurate if would equate to approximately 65m bushels," Jon Michalscheck at Benson Quinn Commodities, said.

He added: "As wet and immature as it was, it could be a blessing that it remains in the field rather than in someone's ground pile or bin."

Funds, funds, funds

Cold temperatures have also raise the spectre of winterkill for autumn-sown crops in many Northern Hemisphere countries, although damage has yet to be confirmed.

Bullish soybean investors could point to rainfall in Argentina which has turned in some parts from a solution to drought to its own problem.

And underpinning it all, of course, were continued expectations of imminent buying by funds, both loaded with new money and about to undertake their annual rejig of positions to set percentage levels.

This will see 20,000 wheat contracts bought in the week from Friday, according to Benson Quinn Commodities.

Traders were "not wanting to chase this market, but also not willing to get too short for fears funds will continue their buying ways", Mike Mawdsley, at broker Market1, said.

March wheat stood 3.5 cents higher at $5.56 ½ a bushel at 08:15 GMT, with March corn up 2.25 cents at $4.21.

Soybeans had the extra impetus of a 1.1% jump in the price of their peers traded on China's Dalian exchange. China is the biggest importer of US soybeans.

Nonetheless, they added only 2.75 cents to $10.55 a bushel for January delivery and 3 cents to $10.64 a bushel for March.

Chinese orders

Palm oil, soyoil's main competitor, once again put on a better performance in Kuala Lumpur, hitting a seven-month high of 2,728 ringgit a tonne for the benchmark lot.

Traders have high hopes for Chinese buying ahead of its new year celebrations next month, and at a time when Malaysian palm production is heading towards a seasonal dip.

The benchmark March contract lot eased to 2,704 ringgit up 22 ringgit, in later deals.

By Agrimoney.com

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