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Morning markets: grains edge lower amid profit-taking talk

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Yet again, grains retreated in early deals, as they have done for most of this week.

This time will the losses actually stick, rather than being overtaken by buying in the live session?

There appeared a greater sense that Friday could bring an end to crops' winning run in Chicago, where

corn

and

wheat

have closed higher for five successive days, and

soybeans

six.

"It is the last trading day ahead of long weekend and I would anticipate some profit taking to develop a In line with the theme of the week," Kim Rugel said.

Weather concerns

But that does depend on what the cause celebre of the moment, South American weather, has in store, and the latest on that was not so promising for growers.

While some rain is forecast in the short-term for Argentine crops desperate for moisture, it is not expected to "cover critical regions like southern Cordoba ... and most of Buenos Aires province, regions where conditions could worsen once northern winds and a heatwave return", the Buenos Aires cereals exchange said late on Tuesday.

And, of course, moisture is not the only concern, with high temperatures potentially setting back corn pollination, as it did in the US in July.

Mr Rugel said: "After receiving above normal rainfall in October, near normal rainfall in November, December precipitation has been well below normal in Argentina and southern Brazil.

"At same time rains have diminished, temperatures have turned hot with weekend temperatures expected to be 90 to 100 degrees [Fahrenheit]."

'Exciting few weeks'

"Bottom line - look for changing forecasts to swing the market up or down on any given day," Mike Mawdsley at Market 1 said.

"It could be an exciting few weeks ahead."

Not that movements were particularly exciting as of 08:40 GMT, with soybeans for January easing 0.2% to $11.60 ½ a bushel, and March corn unchanged at $6.17 ½ a bushel.

Wheat, for which South American weather is less of an issue (with harvest well underway) eased 0.2% $6.20 ¾ a bushel, gaining support from corn, against which it has for much of 2011 lost its usual premium.

Risk on

Also feeding into investors' calculations were a broadly positive feel on external markets, evident in rises in major Asian stockmarkets, with the exception of Toyo's where

shares

dipped 0.8%.

The positive mood was attributed to Thursday's US data showing claims for unemployment benefits dropped last week to their lowest since April 2008, while consumer confidence hit a six-month high.

In a further sign of improved sentiment, the safe haven of the dollar eased further, down 0.3%, against a basket of currencies, a fillip to dollar-denominated assets such as many commodities in making them more competitive as exports.

Brent

crude

added 0.3%, with London

copper

higher too.

Upward palm

And moves on agricultural commodity markets later on could be influenced too by a US quarterly report on hogs and pigs expected to show a rise of 1.3% rise in the herd year on year, with the actual number set to have an impact on grain as well as hog futures, as an indicator of feed demand.

Unusually, because of the Christmas holidays ahead and early closing in some quarters, the report will be unveiled during Chicago trading hours (which are normal on Friday), at 18:00 GMT.

Kuala Lumpur traders at least were not expecting negative influence to wash up on their shores, sending

palm oil

up 1.7% to 3,151 ringgit a tonne, boosted by concerns for the impact of poor weather on output.

Official Malaysian weather forecasters have issued warnings that heavy rains may bring floods to key oil palm growing states of Johor, Pahang, Sabah and Sarawak, which between them produce nearly one-quarter of the country's palm oil.

By Agrimoney.com

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