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Palm oil takes turn under investors' cosh

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Soybeans stabilised on Wednesday, despite continued falls in oil and stocks which sent its vegetable oil rival, palm oil, below 2,000 ringgit a tonne for the first time since March.

Chicago soybeans stood 7 cents higher at 11.40 ½ a bushel at 06:15 GMT, with better traded August beans up 7.25 cents at $10.60 ¾ a bushel and some new crop contracts doing even better.

Soybeans for January 2010 delivery, for instance, added 12.5 cents to $9.23 ½ a bushel.

'Likely to turn lower again'

However, traders remained unconvinced by the recovery, which followed losses of more than 5% on Tuesday as investors liquidated long positions in the face of growing concerns for global economic recovery.

"The market is simply making a rebound after yesterday's sharp sell-off," Lim Myung-im, a trader at Samsung Futures, said.

"In the absence of major fundamental factors, grains markets are likely to turn lower again and closely follow external developments including G8 summit, major corporate earnings and stock markets."

External markets were still in poor form, with Tokyo's Nikkei share index closing down 2.4% and oil setting course for a sixth successive day of losses.

New York crude for August was $0.92 lower at $62.02 a barrel, 15% below an end-of-June high of $73.38 a barrel.

Demand question

Palm oil took it on the chin, falling more than 4% at one point in Kuala Lumpur to 1,984 ringgit a tonne, its lowest for more than three months and 29% below a May high.

"Demand is a big question mark now," a trader told Reuters, the news agency.

"If this news about the global economy still struggling is true, we are in for a massive speculative selldown."

Benchmark September palm oil closed the morning session down 80 ringgit at 1,989 ringgit a tonne.

Corn and wheat revive

However, Chicago's wheat and corn contracts were, like soybeans, in rebound mode.

July corn added 2.75 cents to $3.40 a bushel in thin trade, with better volume in the December contract, which added 0.75 cents to $3.36 ½ a bushel.

July wheat added 1.75 cents to $4.85 ½ a bushel. The September contract, which is taking bigger volumes, took on 1.5 cents to $5.14 a bushel.

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