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Morning markets: investors fear for rally's end

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Crops traded lower on Tuesday – but not yet by enough to prove that the market reversal that many investors have been fearing has begun.

Many traders had feared that the weak close to the last session, after a strong start, had signalled the end of fund buying, and the beginning of a long-awaited downtrend.

The lower close "could be an exhaustion from the buying seen lately", Mike Mawdsley at broker Market1 said.

At GrainAnalyst.com, Vic Lespinasse said the soft finish "could signal the rally is over, at least for now.

"Many traders think when a market doesn't react positively to bullish news, this is a sign it is heading in the opposite direction.

"I think it is still too early to come to this conclusion but the market certainly acted poorly," he added, singling out soybeans for a poor performance despite decent export data and a stronger dollar.

'Wild and thin'

However, there was some fundamental information to explain Tuesday's soft start too, with the dollar rebounding, and pushing the euro back below $1.49.

Updated US crop progress data showed decent progress in America's long-delayed corn harvest, which was pegged at 68% complete, at the upper end of traders' expectations.

The soybean harvest is close to finishing, with 94% done.

And, the joker in the pack is the prospect of America's Thanksgiving holiday on Thursday, which may make trading "wild and thin", Mr Mawdsley said.

Planting delays

Chicago soybeans for January dipped 8.75 cents to $10.33 ¼ a bushel at 07:40 GMT, with December corn down 2.5 cents at $3.84 ¾ a bushel and its younger sibling, March, off 3 cents at $4.00 ¼ a bushel.

December wheat was relatively strong, down 2.5 cents at $5.54 ¾ a bushel for December delivery and 1.5 cents down at $5.77 a bushel for March.

It had some fundamental support from the crop progress report, which showed that while most US winter wheat plantings were near-complete, the average was kept down to 93% by big delays in states such as Arkansas and Missouri, which grow the soft red winter wheat traded in Chicago.

Palm slumps

Still, Chicago's losses weren't a patch on those witnessed in Kuala Lumpur, where benchmark February palm oil stood 2.0% lower at 2,442 ringgit a tonne.

Much of this was down to the poor finish by oilseed rival soybeans in the US on Monday – palm had ended up 3.1% at a 14-week high.

Traders also blamed a soft performance by oil, which stood 0.4% lower at $77.25 a barrel.

Still, there is hope for prices ahead, with Standard Chartered forecasting a recovery from the second quarter of 2010 to take them to an average of 3,000 ringgit a tonne next year, from 2,202 ringggit a tonne this year.

By Agrimoney.com

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