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Morning markets: weak dollar helps crops stay firm

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Crops managed some headway on Wednesday, helped by a weaker dollar and some concerns over the slow pace of the US autumn harvest.

The dollar fell to its lowest for 14 months against a basket of currencies and, individually, against the euro too, which stood not far below $1.49, with talk of it soon reaching $1.50.

A weak greenback makes US exports, such as farm commodities, more competitive.

Meanwhile, the latest US Department of Agriculture crop progress report - delayed this week because of Monday's Columbus Day holiday - held some scraps for bulls.

'Unfavourable' weather

The US corn crop is still behind, with 74% rated mature compared with an average of 92% by now.

Harvesting is lagging too, with 13% of the crop in the silo compared with an average of 35% and up by only three percentage points in the week, less than some traders had hoped for.

That points to some vulnerability still to the adverse weather hitting major growing regions.

"Freezing temperatures in the western Midwest may have damaged any immature crop," Meteorlogix said.

"The weather pattern will remain unfavourable for crop dry down and the harvest throughout the Midwest."

Good condition

Still any damage had yet to make itself felt in USDA crop condition data, which showed 70% of corn in good or excellent condition, the same as last week.

And there is some feeling among traders that the crop rally may have done enough for now to reflect what risks there are.

December corn stood 1 cent higher at $3.82 ¾ a bushel in Chicago.

Wheat also made slower progress, after rising 16% over the last 10 days or so.

Chicago's December contract added 1.5 cents to $5.12 ¾ a bushel, with Kansas's contract flat at $5.25 a bushel.

Export question

Soybeans, meanwhile, made a fresh rush at the $10 a bushel mark, with the crop progress report having little to frighten bulls. The November contract was 5.75 cents higher at $9.98 ¾ a bushel.

The proportion of the crop harvested was 23%, compared with 57% by now in an average year. Meanwhile, the percentage in the top two condition bands eased by two percentage points, albeit to a thoroughly respectable 65%.

Much of the recent movement in soybean prices has revolved around to a large extent around the prospect of exports to China, the world's biggest importer of the crop, as well as harvest weather.

"In recent weeks, China has put out the word that its buying will drop sharply in October," Terry Roggensack at the Hightower Report said.

"However, they announced at the start of the current week that they remain committed to stockpiling domestic supplies of soybeans, rapeseed and corn."

He added: "Traders indicate that China has shifted its buying interest to South America in recent days with a concentration on post-harvest delivery slots in April and May. They are thought to still need US cargoes for late 2009 and early 2010 delivery."

Firm ringgit

In Kuala Lumpur, soy's vegetable oil rival, palm, edged higher, continuing to be buoyed by export hopes, although gains were limited by a stronger ringgit.

The ringgit had gained more than 2% against dollar in the past two weeks.

Benchmark December palm oil closed the morning session on the Bursa Malaysia Derivative Exchange up 17 ringgit at 2,174 Malaysian ringgit ($643.2) a tonne.


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