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Morning markets: soybeans lead as eurozone hopes raise crops

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Risk assets started the week where they left off the last one, in forward gears. And this time, the sentiment spread into agricultural commodity markets.

Hope was injected by the Italian austerity programme, and Silvio Berlusconi's resignation as prime minister, proceeding according to plan over the weekend. With Greece also looking more on the front foot, this gave the impression of a eurozone ready to get to grips with its debt problems.

Shares traded higher in Asia, where Tokyo's Nikkei index closed up 1.1%, with Singapore stocks up 1.6% in afternoon deals and Shanghai stocks up 1.9%.

And commodities, to greater and lesser extents, made ground too. Brent

crude

added 0.3% in a quest to regain $115 a barrel, while

copper

soared up the exchange limit in Shanghai.

China soybean estimates

In grains, gains were widespread, if not heroic, with some thoughts that their weakness in the last session, contrary to other risk assets, may have been down to position liquidations following MF Global's collapse.

"Not sure if MF Global clients were liquidating grains. But with crude up $1.00, the Dow up 275 points, the dollar down, and corn and wheat down, it makes you wonder," Mike Mawdsley at Market 1 said.

Whatever, in Chicago,

soybeans

, which did best last time, maintained their leadership, cheered in part by a weekend conference at which a trading executive at China's Cofco forecast the country's imports of the oilseed at a record 58.5m tonnes in 2011-12.

A trader at Noble's Chinese arm put the figure at 61m tonnes.

The estimates contrasted with estimates from China's official CNGOIC crop bureau of soybean imports of 52m tonnes this year, the first fall since 2004.

The US Department of Agriculture has Chinese 2011-12 soybean imports at 56.5m tonnes.

'Shy stocks'

And this when there are rumours of China's SinoGrain, the state organisation which buys for crop reserves, sniffing around for US soybeans.

The extent of China's imports means there are "probably few days when they are not interested in the US soybean offer", Brian Henry at Benson Quinn Commodities said.

However, he did believe China's soybean inventories "are shy of a comfortable level". And, furthermore, China has shown form in the past couple of weeks in stockpiling, with a 1m-bale

cotton

purchase.

Soybeans for January added 1.1% to $11.79 ¼ a bushel as of 08:45 GMT.

(Cotton itself edged up 0.1% to 99.36 cents a pound in New York, for December delivery, helped by a 0.5% rise to 20.385 yuan a tonne in the fibre on the Zhengzhou exchange in China, the top cotton-importing country.)

Wrong weather

As for the Chicago grains lagged soybeans too, but by a modest sum, especially

wheat

which added 0.5% to $6.20 a bushel for December.

The southern US Plains, where winter wheat seedlings need rains, were largely dry over the weekend, and will "stay dry over the next seven-to-10 days", according to WxRisk.com.

Meanwhile, much of eastern Australia, which does not need moisture as harvest is underway, looks like getting some, with "further widespread rain predicted over the next eight days", Luke Mathews at Commonwealth Bank of Australia said.

"More than 50mm is forecast for some regions."

Technical battle

Wheat was also supported by its atypical discount to

corn

, which gained 0.4% to $6.41 ¼ a bushel for December delivery.

And, technically, many analysts have flagged the importance of the grain making a rapid response after on Thursday falling below its 20-day moving average, at just under $6.49 a bushel.

"The last time corn broke through the 20-day moving average corn prices went from $7.40 a bushel all the way down to $5.90 a bushel before finding support," Benson Quinn's Mr Henry said.

"If the $6.36 a bushel level is breached, the December contract finds a little support at $6.31 a bushel and better support at $6.21 a bushel."

Palm springs

In Asia,

palm oil

, newly restored to analysts' good books, continued its comeback, boosted by ideas of waning Indonesian and Malaysian production, with the La Nina potentially deepening a seasonal decline.

Crude palm oil for January added 1.2% to 3,172 ringgit a tonne in Kuala Lumpur, hitting 3,190 ringgit a tonne earlier, the highest since June.

But

rubber

headed lower, dropping 1.8% to 271.50 yen a kilogramme in Tokyo for April delivery, despite efforts by the leading producers, Thailand, Indonesia and Malaysia, to stabilise prices.

By Agrimoney.com

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