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Morning markets: palm oil dogged by yield question

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With Chicago closed, Kuala Lumpur palm oil took centre stage among food commodities in early trade on Monday – and used its opportunity to set a new five-week low.

A hangover from Friday's dismal end to a dismal week for Chicago soybeans did not help.

Chicago's near-term September contract slumped 15% over the week, albeit in thin trading, with the better traded new crop November lot slipping 8.8%.

And there are concerns in Kuala Lumpur of a revival in production, at the same time as declining Malaysian export data seem to indicate that demand is weakening.

El Nino question

Recent rainfall in is viewed as helping revive yields, although Old World analyst Thomas Mielke gave bulls some hope by noting potential damage caused by El Nino.

"Malaysian palm oil production is already affected by El Nino weather patterns," Mr Mielke said.

"Now we have to see how long it will last."

The benchmark November contract closed the morning session on the Bursa Malaysia Derivative Exchange down 42 ringgit at 2,155 ringgit a tonne, after hitting 2,146 ringgit a tonne earlier, its lowest since late July.

Chicago markets are closed for the Labor Day holiday.

By Agrimoney.com

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