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Morning markets: freeze puts crop bears on ice

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Crops got off to a bright start to the week, as the prospect of more poor weather in US growing areas encouraged investors seeking some shelter from the prospect of rising inflation.

Meterologix forecast "cool and unsettled weather" in eastern and western US areas which was "unfavourable for the maturing crop and early harvest".

"Some damage to the immature crop is possible," it added.

The report followed a spell of already poor US weather which has included heavy rain and frost in US corn and soybean regions, stalling the early harvest and potentially harming immature corn and soybean crops.

Inflation hedge

Meanwhile, investors have of late been more positive towards crops, in part because of rising fears - also evident in rising gold prices - of reviving inflation.

Assets such as crops (and gold) are viewed as a hedge should prices start rebounding, as they often have following periods of huge economic stimulus.

Also, there is a feeling that crop prices were punished enough during steep falls between June and early September.

They remain well below summer peaks, even after some headway this month.

Corn leads

In Chicago, corn was ahead, in percentage terms, at 06:40 GMT, adding 6 cents to $3.68 ¼ a bushel for the December contract.

Corn has now recovered 24% from last month's lows, regaining about half its losses since June.

Wheat was 8 cents higher at $4.76 a bushel for the December contract. That represents a 12% revival over the last month or so.

Soybeans for November added 13.75 cents to $9.77 ¾ a bushel, their best level for nearly a month.

Export help

Still, all were dwarfed by Kuala Lumpur palm oil, which added 2.1% on data showing a surprise rise in Malaysian exports.

Intertek Testing Services said shipments rose 8.3% to 313,000 tonnes in the first 10 days of this month, an increase which overshadowed data from the Malaysian Palm Oil Board showing that stocks had hit an eight month high.Benchmark December palm oil closed the morning session on the Bursa Malaysia Derivative Exchange up 44 ringgit at 2,129 ringgit a tonne on strong volumes


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