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Morning markets: holiday feeling raises crops

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Crops put on a brighter face ahead of America's Thanksgiving holiday, with traders citing reasons from a weaker dollar to short-covering to plain old tradition.

Soybeans, at least, have something of a history of rising at this time of year. In the last 34 years, they have closed ahead 25 times on the day before Thanksgiving, and 23 times on the day after.

And they made a start, anyway, on following the script this year, adding 6.25 cents to $10.52 ¼ a bushel in Chicago for January delivery.

Will they stick to it?

Battle of the trends

"The 'seasonal' is to see soybeans rally the day before and after Thanksgiving. But if everyone knows it will it happen this year?" Mike Mawdsley at US broker Market1 said.

Kim Rugel at Minneapolis-based Benson Quinn Commodities took a slightly more scientific view.

"Investment money flow has the ability to change that trend, with funds estimated long 80-90,000 contracts heading into month end.

"Beans have trended lower during the last week of the month over the past three months on month-end profit taking."

He added that many funds may not return in such force in December, "with many looking to book year-end profits ahead of the year-end holiday season".

Dollar slips

It may be fortunate for bulls that tradition was not the only reason to buy, with the dollar easing 0.2% against a basket of currencies, and to back above $1.50 against the euro at one point, so making US exports such as crops more competitive.

Data on US jobless claims later was viewed as key in determining whether the dollar will continue this trend.

Some traders also cited some short-covering, after losses on the first two days of the week.

Wheat added 5 cents to $5.38 a bushel for December, with corn up 3.75 cents at $3.79 ¾ a bushel.

Basis for concern

Nonetheless, some brokers urged caution ahead of the proposed December selldown.

Darrell Holaday,at Country Futures, said the futures market in grains was at a "fictitious level compared to the cash market" and that "heavy deliveries are threatened".

"Consider this. A year ago cash corn in Omaha was actually higher than it is today. Why? Because in the previous two years, the basis has been even with the futures.

"This year the basis is -$0.40 a bushel. This is very negative and will spur deliveries in the eastern Corn Belt. "

Production hiccups

No such vertigo looked apparent in Kuala Lumpur, where benchmark February palm oil rose 1.5% to touch 2,516 ringgit a tonne at one point – its highest since mid August, or 15 weeks ago.

An extra six ringgit would have taken it to its highest since early June.

Data from Societe Generale de Surveillance showing palm exports up 6.4% at 1.18m tonnes for the first 25 days of the month was viewed as OK. (Especially when rival cargo surveyor Intertek Testing Services had the rise at only 1.2%)

A bigger help was a warning from Malaysian plantation owner Genting that its palm output will be lower in November and December due to the heavy rains which many traders have been betting will dent national production.

Palm stood 28 ringgit higher at 2,506 ringgit a tonne at 07:45 GMT.


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