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Morning markets: share rally leaves crops unmoved

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Tuesday looked better for share investors than commodity bulls, with agricultural commodities trading a bit softer despite some positive economic news.

Japan's Nikkei share index soared 2.7%, its fifth successive positive close, while the MSCI index of shares in other Asia Pacific countries set a fresh 10-month high.

The rises followed some positive signs on the global economy, with the minutes of the latest meeting of Australia's central bankers showing increased optimism, and an article from Ben Bernanke, the chairman of the US Federal Reserve, viewed as having a concerned, but not excessively worried, tone.

Still, commodities took the chance to show how decoupled they are from other financial markets, with prices of crude, Chicago farm commodities and Kuala Lumpur easing.

Corn pollination

Chicago corn was the worst performer, in percentage terms, standing 2.25 cents, or 0.7%, lower at $3.21 a bushel at 07:00 GMT, for the benchmark September contract.

Weather was in part to blame, with conditions looking idea for the crop's ongoing pollination season in the US.

And the latest US Department of Agriculture report on crop conditions showed 71% of US corn rated as good or excellent, the same as last week but a six-point improvement year on year.

Good yields are beneficial to farmers and investors with short positions, but generally unhelpful to bulls seeking higher market prices.

Harvesting progress

Soybeans lost 6.5 cents to $10.26 ¾ a bushel for August delivery.

Again, the condition of the crop looked good with 67% rated by the USDA as good or excellent, up one percentage point on the week and six points year on year.

Wheat was the best performer, adding 0.5 cents to $5.42 ½ a bushel for the September contract.

The USDA report bore it scraps of bullish news, with progress in harvesting the winter crop a little way behind the long-term average, and a small increase in the level of the spring crop rated poor or very poor.

'Not so aggressive'

In Kuala Lumpur, benchmark October palm oil lost 10 ringgit to 2,150 ringgit in the morning session on Bursa Malaysia's derivatives exchange as doubts on demand reappeared.

Traders have viewed the coming of a series of Asian festivals, including Ramadan, as positive for consumption.

And, as KAF pointed out in a research note, a widening discount for palm oil compared with soyoil should help consumption.

Still, a trader told Reuters, the news agency: "The big buyers like China and India are not so aggressive. I suspect they are waiting for prices to fall further."

By Mike Verdin

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