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Morning markets: grains continue gentle recovery

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Grains continued a slow recovery on Tuesday, helped by bargain hunting in wheat and, in corn, by prospects of a weak Chinese crop.

Chicago wheat for December delivery was 4 cents higher at $4.59 ½ a bushel, underpinned by thoughts that the bear run which took it as low as $4.25 ¼ a bushel earlier in the month may have gone too far.

With the pressure from the northern hemisphere harvest passing, and prices in line with those before last year's bubble, many investors believe that the storm may be easing for wheat.

The crop has for 10 trading days stayed within a range of $4.50-4.80 a bushel, amid robust trading volumes, a consolidation some chartists believe heralds an upward break to come.

'No damaging cold'

Corn, meanwhile, added 0.75 cents to $3.39 ½ a bushel for the December contract, looking to build on a rally which has sent it 7% higher in five days.

There looks little prospect of a frost to damage a US crop which remains well behind in its development.

Just 6% of America's corn crop has been harvested, one third of the proportion typically harvested by now, Washington data late on Monday showed.

But that may not be a problem given that, according to Meteorlogix, "there is no damaging cold in sight".

Drought damage

Nonetheless, there is a growing feeling that China's corn crop will come in well below the 165m tonnes or so that Beijing is predicting, thanks to drought followed by, in many regions, frost.

A tour by US grains experts on Monday pegged the crop at less than 149m tonnes.

Soybeans, once again, lagged, down 2 cents at $9.17 ½ a bushel for November delivery.

The price is beginning to feel some harvest pressure although, like corn, delays are leaving crops in the field far later than normal.

Furthermore, analysts are expecting huge crops from South American exporters Argentina and Brazil early next year.

Export data

In Kuala Lumpur, beans' rival in the vegetable oil market, palm oil, did a bit better, amid hopes that Asian countries would raise imports towards the end of a holiday season which has sapped stocks.

The benchmark December contract closed the morning session on Bursa Malaysia's derivatives exchange up 12 ringgit at 2,115 ringgit a tonne.

Cargo surveyors will on Wednesday reveal their latest data on Malaysian palm exports.


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