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Morning markets: oil massage refreshes soybeans

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Soybeans reasserted their dominance in early deals on Thursday, as firm oil prices helped steeled investors' resolve following rumours of cancelled Chinese orders.

Rumours that China had cancelled 300,000 tonnes of bean purchases and deferred a further 500,000 tonnes into next year – with another report citing 60,000 tonnes ditched, and yet another going for 180,000 tonnes – knocked the stuffing out of soya later on Thursday.

However, an upbeat oil market, always an important lead for grains, steered traders back to soybeans' fundamental supply issues, such as the shrivelled Argentine harvest.

"A positive lead from oil today is constructive for the grains market," Toby Hassall, an analyst with Commodity Warrants Australia, told Reuters, the news agency.

"It has been a very disappointing production year in South America and if we see any further downward revision to their production, it can be a positive factor for the US soy market."

Oil spurts

Brent crude was up 1.8% at $57.50 a barrel at 06:30 GMT. Tokyo shares did their bit too, closing 0.5% to the good at a fresh six-month high.

Chicago May soybeans were 7.5 cents higher at $11.26 ½ a bushel, with similar gains across the board. November soybeans, for instance, added 10.75 cents to 9.82 ¾ a bushel.

Firm oil also dragged corn, an ethanol feedstuff, a touch higher.

May corn was 0.75 cents higher at $4.05 ½ a bushel, with July, now the most traded contract, up 2 cents at $4.14 a bushel.

Kansas wheat tour

Wheat was the more, while investors digested data from the Kansas winter wheat tour.

While the data appeared bullish, with yields estimated at 40.8 bushels an acre, down 2.5 bushels per acre year on year, investors considered some of the data already priced in.

July wheat added 1.25 cents to $5.71 ½ a bushel, with September up 1 cent at $5.98 a bushel while March 2010 slipped 3.25 cents to $6.31 ½.

Data considerations also held back palm oil, with investors reluctant to place too many bets ahead of a string of statistics next week on Malaysian production, exports and stocks.

Benchmark July palm oil eased 1 ringgit to 2,679 ringgit a tonne.

By Mike Verdin

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