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Morning markets: wheat falls to fresh 2009 low

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Wheat dropped to a fresh 2009 low in Chicago as concerns of more-than-ample demand continued to deter investors from taking long positions.

Many markets remained nervous ahead of the latest monthly pronouncement later on Wednesday by the Federal Reserve, the US central bank, on monetary policy. Equity markets and oil edged lower.

But agricultural commodities had an extra reason for jitters – the US Department of Agriculture will, ahead of the Fed data, reveal its latest estimates on crop global supply and demand.

The report would need a major shock to shift wheat into another gear. The argument appears to be only about quite how rich global stocks will be next spring, at the end of the southern hemisphere harvest.

September wheat dropped to $4.83 a bushel – the lowest for a near-term contract since December – before recovering some ground to stand at $4.84 ¾ a bushel at 06:25 GMT, down 0.5 cents on the day.

The picture was similar in new crop contracts, with December wheat hitting $5.11 at one point, 0.25 cents above a 2009-low hit on Tuesday, before reviving to $512 ½ a bushel, down 0.25 cents.

Corn eases

Other crops eased too, as traders wondered by quite how much the USDA will change estimates.

For corn, one question is by how much the USDA will raise yield estimates, with the consensus estimate for a 4 bushels-per-acre rise from the current 153.4 bushels-per-acre guess. That said, the figure for plantings is expected to drop.

September corn lost 2 cents to $3.24 ½ a bushel, with new-crop December corn down 2.25 cents at $3.28 ¾ a bushel.

Oil crops do better

Soybeans were mixed ahead of a report the market believes will trim US ending stocks in both 2008-09 and 2009-10.

The August contract, which is approaching expiry, slipped 3.75 cents to $12.12 ¾ a bushel. However, forward contracts, which are better traded, may have been more reflective of real sentiment, which was boosted on Tuesday by hopes for further Chinese buying.

November beans added 5.75 cents to $10.44 ½ a bushel, a fresh one-month high.

Their vegetable oil rival, palm oil, made ground too, continuing to bask in Monday's data showing a surprisingly drop in Malaysian stocks.

The benchmark October contract closed the morning session on Bursa Malaysia's Derivatives Exchange up 6 ringgit at 2,458 ringgit a tonne.


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