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Morning markets: strong palm oil eclipses beans

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Palm oil bounced back on Friday after its breather and rejoined soybeans on an upward run, boosted by continued concerns of a supply squeeze.

"The underlying tone is panic because there is too little [palm oil] supply available," a Kuala Lumpur trader told Reuters. "The funds know this and they are back."

Fears for supplies were fanned at the end of last week by data showing healthy Malaysian exports and the lowest stocks since June 2007.

Bursa Malaysia's benchmark July contract stood 2.2% higher at 2,410 ringgit a tonne at 06:00 GMT.

Highest since October

That left soybeans in the shade. While Chicago's May contract made a splash by reaching $10.65 a bushel earlier – the highest level since October 1 – this required a gain of less than 1%. And it was unable to hold on even to that, slipping to $10.63 ½ a bushel, up 5 cents, or 0.5%.

Soybeans have continued to be strengthened by a combination of weak production in South America, where crops have been hit by drought, and strong demand for soybeans, amid talk of government stockpiling.

Wheat and corn once again looked, in pantomime talk, like palm oil's ugly sisters. Chicago corn was 0.5 cents down at $3.85 ¾ a bushel, with May wheat off 1.5 cents at $5.23 ¼ a bushel.

On external markets, oil was a touch weaker, with Brent crude down 0.1% at $53.00 a barrel.

Tokyo's Nikkei share index ended up 1.6% at 845.57.

By Mike Verdin

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