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Morning markets: palm oil takes turn in hot seat

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It was palm oil's turn to seize the high ground on Friday, taking heart from the surge of nearly 7% in soybeans, its vegetable oil rival, in the last session.

Decent Malaysian export figures helped, with Intertek Testing Services, the cargo surveyor, estimating shipments up 13.9% at 1.40m tonnes in July.

And external signals were set to green as well, with Shanghai shares, whose 5% drop earlier in the week sent shivers through global financial markets, up 2% in afternoon trade and Tokyo's Nikkei index closing at its highest level in 10 months.

New York September crude was 1.1% higher at$67.66 a barrel at 06:30 GMT.

China read across?

But the main impetus behind palm oil's 4..1% rise was US exports – or at least the impact of the biggest Chinese order in a year for American soybeans, handing the crop, on Thursday, its best day in Chicago since September.

"I won't rule out the possibility that China also needs to buy more palm oil," a trader at Kuala Lumpur-based brokerage told Reuters, the news agency,

After all, palm oil is an alternative in many uses to soyoil, one of the two main products from soybean processing.

The benchmark October contract on Bursa Malaysia's Derivatives Exchange ended the morning session up 88 ringgit at 2,233 ringgit per tonne.

Beans remain in favour

Not that investors were showing signs of regretting soybean purchases. The crop made a little further ground in Asian trading hours, standing 9.75 cents higher at $11.38 a bushel, for August delivery with new crop contracts doing even better.

November beans gained 11.25 cents to $9.82 ¼ a bushel.

The dollar did its bit here too, sliding 0.4% to 78.934 against a basket of foreign currencies, so making commodities traded in the greenback more affordable to importers.

August beans have now added more than 17% since a mid-month low.

Steady progress

Corn made modest gains, adding 1.75 cents to $3.34 a bushel for September delivery, with the excitement prompted by talk of a cut to US plantings taking a back seat for a while.

Still, the contract's progress has now allowed it to build an 11% recovery from the 2009 bottom hit last week.

Wheat remained the nearest to recent lows, although the benchmark September contract added 4.75 cents to $5.21 a bushel.

The crop has been held back by prospects of a bumper crop and large stocks globally, as confirmed in International Grains Council data on Thursday, and in the US too.

A tour by America's Wheat Quality of spring wheat in North Dakota is believed to have identified huge yields.


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