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Morning markets:crops show gains but small ones as data loom

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Financial markets in general proved a little reluctant to move too far, as the positive force of a potential breakthrough in Greece's crisis faced up against the negative influence of growing debt fears in Italy.

The safe haven of the

dollar

was stronger, but only by 0.1% as of 08:40 GMT against a basket of currencies.

Share

markets were mixed, with Tokyo's Nikkei index shedding 1.3% but Sydney stocks gaining 0.5%, more in tune with the 0.7% rise in Wall Street stocks overnight.

Sure, European shares opened firmer, and Brent

crude

added 0.9%.

But agricultural commodities had an extra reason for caution, with the US Department of Agriculture's latest monthly Wasde crop report only a day away.

At least, that is the current schedule, although broker RJ O'Brien has petitioned the government to delay the report on world crop supply and demand, a key feature of the agricultural commodities calendar, to allow time for investors whose holdings have been tied up by the MF Global collapse to rejig their positions.

Dryness shrinks

These dynamics made for somewhat muted trade in early deals, although it appeared some forces of supply and demand fundamentals were at work.

USDA data overnight showed a 3-point jump to 49% in the "good" and "excellent" rating of US winter

wheat

seedlings as of Sunday, an improvement, if "still a relatively poor reading", Luke Mathews at Commonwealth Bank of Australia said.

And this appeared to be reflected in a 0.3% drop to $7.22 ¼ a bushel in Kansas hard red winter wheat for December delivery.

It is hard red winter wheat, grown in the southern Plains, which has been at the centre of drought concerns, fears which have eased with coming of rains, and with more forecast.

"There are areas that remain very dry, but the area seems to be shrinking," Brian Henry at Benson Quinn Commodities said.

Montana jump

The condition of wheat in the hard red winter states was, at 46% good or excellent, below that in the states growing soft red winter wheat (the variety traded in Chicago), despite a huge improvement in Montana.

Here the proportion rated good or excellent soared 20 points to 48%, a jump which "reflects the delay in emergence of the wheat crop in Montana, which is only 71% emerged versus 93% this time last year", Paul Deane at Australia & New Zealand Bank said.

Meanwhile, Chicago soft red winter wheat did better, adding 0.3% to $6.40 ¼ a bushel for December delivery, helped by the reluctance of funds to build on their large short position for now.

"The large trend-following fund net short position in Chicago continues to reduce the aggressiveness of the sellers in that market," Mr Henry said.

'Wet soils hamper field work'

The USDA data also showed the US

corn

harvest still proving difficult to wrap up in the eastern Corn Belt, if progressing to finish or thereabouts further west.

"The east continued to struggle to pick up as wet soils hamper field work in a lot of those locations," Benson Quinn said.

And, as an extra support to corn, South Korea's largest feed group, Nonghyup Feed, revealed it had bought 85,000 tonnes of the grain, mostly from the US, plus 7,100 tonnes of Australian barley.

Chicago corn for December added 0.2% to $6.54 ½ a bushel.

Export data reflux

Soybeans

, the dogs of the last session, did better this time gaining 0.4% to $12.06 ¼ a bushel for January delivery, with export inspection data apparently ignored on Monday's trade hanging around for positive comment from a number of commentators.

Mike Mawdsley at Market 1 was one to flag the export data, at some 49m bushels, "good" and flag that 39m bushels went to China, the top importer of the oilseed, whose relatively small orders from the US of late have been a big concern to the market.

Elsewhere in the oilseeds complex, January crude

palm oil

moved in line, up 0.4% at 3,024 ringgit a tonne in Kuala Lumpur, but unlike soybeans did manage the achieving of setting a six-week high earlier, of 3,037 ringgit a tonne.

The vegetable oil is being boosted by concerns of another season of La Nina-prompted weather damage to plantations in Indonesia and Malaysia, besides its discount to

soyoil

which has underpinned demand.

Chicago soyoil added 0.4% to 51.38 cents a pound for December delivery.

Car makers stall

Meanwhile, in Tokyo,

rubber

sank a further 1.1% to 278.50 yen a kilogramme for April, putting it within sight, undermined by Thailand's floods, which have caused more concerns over demand for the tyre ingredient than supply, even though the country is the top exporter.

At Phillip Futures in Singapore, Ker Chung Yang noted "persistent demand fears amid widespread floods in Thailand and high inventories in China".

"Thailand's worst flooding in decades has submerged many parts of the country, including industrial estates, disrupting global supply chains," paralysing for instance domestic production at Japan's Toyota, where assembly lines for 20 models are inactive.

By Agrimoney.com

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