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Morning markets: inundated palm leads crops higher

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US crops got off to a firm start to the week, helped by a sagging dollar, although their gains were dwarfed by a 3% jump in Kuala Lumpur palm oil.

The greenback renewed its decline amid generally upbeat signs from financial markets.

Tokyo's Nikkei share index closed a little higher, with Shanghai stocks up 2.7% at 07:20 GMT. Oil also set off on the front foot, up 1.4% at $77.41 a barrel.

However, the dollar's decline was limited by a rejection from China at an economic forum in Singapore of a reference to "market-oriented exchange rates" in an end-of-summit communiqué – a move which was taken as a sign that the country is keen on maintaining a weak yuan for now.

It also set the scene for a strained meeting between Beijing leaders and US president Barack Obama.

The euro's rise stopped just short of $1.50.

Prices firm

The help of a weakening currency once again helped US crops make headway, by making them more competitive on export markets, in the absence of major news on fundamentals. Weather for now looks set in favour of America's delayed corn and soybean harvest.

Chicago soybeans added 1.6% to $10.02 ¾ a bushel, now the front-end contract after the expiry of the November lot on Friday.

Corn for December closed in on the $4 a bushel mark, above which it has not closed for three weeks, gaining 1.7% to $3.97 ¼ a bushel.

And December soft red winter wheat added 1.0% to $5.44 ½ a bushel.

Heavy rains

Still, these were small gains compared with what palm oil managed on the Bursa Malaysia Derivatives Exchange, soaring 67 ringgit to 2,355 ringgit a tonne for the benchmark February contract.

The increase reflected concerns that heavy monsoon rain in Malaysia – the world's second biggest palm oil producer – would cut production from last month's multi-year high by potentially 25%.

Besides hampering harvesting, downpours may also affect yields by raising the moisture content of the palm fruit.

Meanwhile, Malaysian exports appear to be picking up pace, rising 13% to 674,000 tonnes in the first 15 days of the month, according to Intertek Testing Services, and by 21% according to rival cargo surveyor Societe Generale de Surveillence.


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