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Morning markets: prices rise as China fears ease

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So just how serious is the news of China's grain sale?

On Thursday, investors in Chicago flipped from phlegmatic to frenetic. Friday flipped them back again, helping crops recover some lost ground.

Near-term, August, soybeans rebounded 11 cents from their three-month low to stand at $9.87 a bushel at 05:45 GMT.

Corn, which closed the last session at a 2009-low, recovered 2.75 cents to $3.19 ½ a bushel.

'Not a surprise'

The market had "over-reacted" in sending prices down so far on news that China would sell 500,000 tonnes of soybeans, 1.2m tonnes of corn and 750,000 tonnes of wheat from state inventories next week, Paul McKay, a director of Commodity Broking Services in Australia, said.

"China's move isn't a surprise and soybean stocks are still pretty tight," he told Reuters, the news agency.

"Fundamentally nothing has changed."

And, as traders have repeatedly pointed out, prices for China's sale may be uncompetitive, with soybeans going for $549 a tonne, equivalent to nearly $15 a bushel.

(Some sceptics have said that China's move is really an effort to collapse Chicago prices so that it can continue its shopping spree of US beans – which has set a record this year – more cheaply.)

Wheat edges ahead

In fact, Thursday had offered some upbeat signals, such as robust export sales for corn, at 1.17m tonnes, and soybeans, at 684,000 tonnes - 636,000 tonnes of which were bound for China.

Wheat's were the least impressive at 442,000 tonnes, in line with market ideas. Nonetheless, the grain on Friday remained aloof from the volatility in neighbouring pits, adding 4.75 cents to $5.38 a bushel for September delivery

A cut by the Buenos Aires Grain Exchange of its estimates for Argentina's wheat plantings, to 2.75m hectares from 2.80m hectares, has been viewed as helpful.

Monsoon factor

In Kuala Lumpur, palm oil returned to the upward path, helped by soybeans' better performance and hopes for stronger demand.

The forthcoming Ramadan period is often viewed as potentially good for consumption, given the feasting that follows the festival's fasting.

The on-off monsoon is also viewed as potentially raising sales to India, which on Thursday revealed that the resumption of rains had come too late to save sugar cane and rice, at least, from some losses.

Benchmark September palm oil closed the morning session on Bursa Malaysia's derivatives exchange up 1.7% at 2,055 ringgit a tonne.

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