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Morning markets: lift in Dubai gloom raises crops

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Crops got the week off to a bright start, with soybeans approaching their highest levels for nearly three months, as fears about Dubai eased, allowing a retreat in the dollar.

Concerns of a Dubai debt default, fears which prompted steep drops in markets such as shares and oil as well as crops last week, were somewhat assuaged by support from fellow members of the United Arab Emirates federation. Dubai's neighbours include oil-rich Abu Dhabi.

The UAE's central bank on Sunday set up an emergency facility to support bank liquidity in an effort to shore up the federation's banks and stem the flight of capital.

Market movements

Relief over a move which appears to cut the risk of Dubai's crisis turning into a more global one encouraged investors to quit the dollar, a safe haven in tough times.

The euro climbed back above $1.50 against the dollar, standing at $1.5065 at 07:45 GMT.

Oil - also a key influence on crops, many of which are turned into biofuels - made some headway, adding 0.8% to $76.67 a barrel.

And, on share markets, Shanghai stocks jumped 3.2% while Tokyo's Nikkei index closed 2.9% higher.

Position squaring

Chicago's crop markets also reacted positively to the news, with soybeans for January up 13 cents at $10.66 a bushel, a cent from setting a fresh high-since-September 1.

Corn for December was 2.75 cents higher at $4.00 a bushel, hitting the $4-a-bushel mark for the first time in a week, while its March peer was 1.5 cents to the good at $4.15 a bushel.

December wheat stood 10.25 cents higher at $5.59 a bushel, with the March contract up 9.75 cents at $5.79 ½ a bushel.

While there appeared little news on crop fundamentals to shift markets, other factors in play included the first notice day for expiry of December contracts and the month end, both of which tend to encourage position-squaring.

Soft exports

Kuala Lumpur palm oil had no such luck. But then, with the market closed on Friday for a Malaysian holiday, this was investors' first chance to react in earnest to the Dubai fears.

And their response was actually modest, especially given soft export data, with the benchmark February contract down 8 ringgit to 2,474 ringgit a tonne.

On exports, cargo surveyor Intertek Testing Services said that Malaysia's palm oil shipments fell 0.3% in November to 1.42m tonnes, while rival Societe Generale de Surveillance pegged them up 1.8% at 1.43m tonnes.


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