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Morning markets: grains put better feet forward

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Chicago corn put a better foot forward – eventually - on Monday, helped by a spot of short-covering ahead of a key US report, but could not keep up with Kuala Lumpur palm oil.

Rising optimism about the global economic recovery since better-than-expected US unemployment figures provided a helpful backdrop. Global demand for crops is, after all, dependent to a large part on economic output.

But traders said that a major impetus for corn was some determination among holders of short positions to take some profits.

Corn, after all, in touching $317.25 a bushel earlier on Monday was 13% below its beginning-of-August peak and only 4% above its 2009 low of $3.04 a bushel, so heading towards a mark traders expect may inspire some buying by value hunters.

'Cat among the pigeons'

Furthermore, investors may be wary about holding positions going into Wednesday's latest US Department of Agriculture report on crop estimates which is expected, among other data, to come up with an updated statistic for US corn plantings.

"It is going to be very tempting to close positions before a US report which may well put a cat among the pigeons," a London trader told Agrimoney.com.

"To holding out is to take a bit of a punt."

Chicago corn for September stood 4.25 cents higher at $3.26 ¼ a bushel. At 07:30 GMT.

Russia harvest fears

Wheat was a touch higher too, again after a weak start which took it within 2 cents of its 2009 low of $4.83 ½ a bushel.

DTN Meteorlogix added some impetus here by suggesting a dry spell in parts of Ukraine and Russia, big players in the wheat trade.

DTN forecast "significant crop losses" in spring wheat, although given that this has been something of a concern for months, much may have already been factored into prices.

September wheat added 2 cents to $4.91 ½ a bushel.

Slimmed-down stocks

Soybeans, meanwhile, a better performer last week, stayed gently in demand, adding 3.5 cents to $11.88 a bushel.

Indeed, the vegetable oils spotlight turned to Kuala Lumpur, where palm oil rose 2.0% in the morning session on Bursa Malaysia's Derivatives Exchange – and that was before data showing a bigger-than-expected drop in Malaysian stocks.

The benchmark October contract closed the morning session up 47 ringgit at 2,387 ringgit a tonne, and was expected to head higher after the Malaysian Palm Oil Board in lunchtime revealed crude palm oil inventories down 5.7% at 1.33m tonnes.

By Agrimoney.com

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