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Morning markets: taste for risk lifts farm commodity prices

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There's confidence for you.

Agricultural commodities might have been expected to cower near last night's closing levels, what, with the US Department of Agriculture's latest Wasde report on world crop supply and demand on the menu later.

For a report typically a highlight of the crop investors' calendar, this one is being especially anticipated for its estimate of US


stocks at the close of 2010-11, which is expected to be downgraded from a slim 675m bushels to a wafer thin 586m bushels, after last week's data showed stocks half way through the crop year running well short of expectations.

However, investors who lost some of their mojo in the last session, which was marred by another Japanese earthquake, rediscovered enough to send Chicago crops off to a firm start.

May corn added 1.0% to $7.66 ½a bushel as of 07:20 GMT (08:20 UK time), back within 1% of Thursday's record high, leading Chicago peers higher too.

Nikkei message

A big help was a rise in Tokyo stocks, which rose 1.9% to close at their highest level since before last month's earthquake, so removing lingering doubts that the latest tremors had caused significant damage.

This helped other markets too.


gained, sending Brent crude to a two-year high of $123.50 a barrel, as supply concerns over North African and Middle East unrest trumped demand fears raised by the latest Japanese quake.



rose too, on relief that the world economic revival story had not taken another severe knock.



, meanwhile, eased as investors sought better-yielding currencies. It dropped 0.5% to a four-month low against a basket of currencies, near to a six-month low against the euro, and to a 29-year bottom against the Australian dollar.

A weaker greenback makes dollar-denominated assets, such as many crops, more affordable to buyers in other currencies.

Beans bounce

Corn's performance helped pull up its rival for US spring sowings acres,


, too, despite some doubts that low stocks of the oilseed revealed last week will be reflected in a lower end-2010-11 figure in today's Wasde.

Poor US weekly soybean export sales data revealed on Thursday, of 190,000 tonnes for 2010-11 and 2011-12 combined, further raised "concern that USDA will reduce soybean exports and/or crush use to leave US stocks unchanged", Kim Rugel at Benson Quinn Commodities said.

Meanwhile, the USDA is seen likely "increasing South American production which would increase global carryout stock".

Soybeans for May stood 0.9% higher at $13.76 ¼ a bushel.

Rain where it's needed?



was higher too, up 0.5% at $7.77 ¼ a bushel for May, with traders taking a better view of its export sales data of 723,000 tonnes.

"Total sales of [US] wheat for the past month are running 39% ahead of last year's pace," Luke Mathews at Commonwealth Bank of Australia said.

However, Kansas wheat extended a new trend of giving back some of its premium, amid forecasts of some rain for parched seedlings of the hard red winter type it trades. The May lot stood just 0.2% higher at $9.24 ½ a bushel.

As an aside, something of the same weather dynamic is going on in Western Australia, typically Australia's top grain producing state, where "rainfall over the last week has been barely enough to settle the dust in most of [the state's] wheatbelt", Australia & New Zealand Bank said.

"We are still around two week's away from the official kick-off date for winter plantings in Western Australia.

"Weather models indicate chances of up to 15mm of rain across parts of the wheatbelt on Monday and then again chances of higher falls next weekend."

Downgrade ahead?


, meanwhile, added 1.8% to 211.98 cents a pound, despite poor US export data on Thursday, amid talk that the USDA's Wasde will trim forecasts for domestic cotton production by 160,000 bales to 18.2m bales, and year-end stocks by 200,000 bales to 1.7m bales.

When US inventories are already running at such thin levels, every bale counts.

And, in Kuala Lumpur,

palm oil

had a better day, amid analysis that its recent losses had left it attractively priced compared with rival vegetable oil, soyoil.

Palm oil for June added 1.5% to 3,378 ringgit a tonne.


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