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Evening markets: Greek hopes boost ags - with two exceptions

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Agricultural commodities, with one notable exception, managed better than some other markets to maintain their early brightness.

Many risk assets gave back early headway as at a Greek poll, showing that voters appear to be turning more in favour of parties which will do the necessary to keep the county in the eurozone, was tempered by concerns over Spain's plans for recapitalising its banks.

Without the approval too by US markets, closed for the Memorial Day holiday

, shares

lost early gains, to close up just 0.1% in London, while Brent

crude

fell back from more than $108 a barrel to stand at a little over $107 a barrel in late deals, up 0.2% on the day.

The safe haven of the

dollar

regained some ground to stand 0.2% lower against a basket of currencies in late deals.

Real strength

The better mood, as well as shrunken European inventories, was reflected in firmer prices of robusta

coffee

, which for July delivery ended 0.2% higher at $2,247 a tonne in late deals.

White

sugar

for August added 0.9% to $561.20 a tonne, also getting help from further strength in the Brazilian real, which hit R$1.97 to $1 at one point, down from R$2.10 on Thursday.

Brazil is the top sugar exporter, and a stronger real decreases the competitiveness of its exports besides lowering the attraction of dollar-denominated prices, so lowering the appeal to its producers of hedging in New York.

That said, Egypt on Monday revealed the purchase of 50,000 tonnes of, Brazilian, raw sugar.

And Luke Mathews at Commonwealth Bank of Australia noted that heavy rains in Queensland may "provide some temporary delays" to the Australia cane crushing season expected to start this week.

Rubber retreats

Elsewhere,

palm oil

- a big European import, and so sensitive in pricing terms to the eurozone crisis - closed up 0.5% at 3,144 ringgit a tonne for Kuala Lumpur's benchmark August contract.

"Palm oil prices remain favourable due to the shortfall in soybean production and increasing demand from China and India," Anglo-Eastern Plantations noted in a trading update.

But one exception to the bullish run came in Tokyo, where

rubber

ended at 268.70 yen a kilogramme for November delivery on the contract's debut, down 0.6% from where the October lot left off on Friday.

It was not clear whether the market closed before news emerged that China is to subsidise vehicle purchases in rural areas in the latest of a series of measures aimed at stimulating the world's second-biggest, but somewhat slowing, economy.

Russian rain

And the other was in Paris, where

wheat

stood lower in late deals, while London wheat lost early headway.

A stronger euro, boosted by the Greek hopes, was one headwind in Paris.

But so were what FCStone termed "good rains" in the former Soviet Union, whose dryness has been the grain market's major pre-occupation of late, besides in eastern Australia.

That said, there was hardly enough in the precipitation to force bulls to give up hope.

"We are hearing mixed reports, with some areas missing out and other receiving in excess of five inches," FCStone's Jaime Nolan-Miralles said.

Dryness shift?

In Russia itself, the Institute for Agriculture Market Studies said that rains in the South, the centre of dryness fears, "eased tension there last week, although dryness remains in a vast area of Voronezh, Volgograd, Saratov, Samara, Lipetsk, Tambov and Penza".

Indeed, SovEcon said that crop fears may simply spread from the South to Siberia and the Urals.

And Mr Nolan-Miralles warned that "north eastern Germany and western Poland continue to look for rains for a stressed winter wheat crop".

Paris wheat ended 0.2% lower at E216.00 a tonne for the benchmark November lot, while London's November contract finished down 0.3% at £159.00 a tonne.

Canola concerns

The contract which did do better in Paris was

rapeseed

, which added 0.9% to E469.75 a tonne, boosted by the emergence of yet further weather threats to global production prospects already dented by the likelihood of another disappointing European harvest.

Frost has raised concern over Canadian canola seedlings, with dryness emerging as an increasing threat in Western Australia, which was down to grow some 40% of Australia's crop.

The drought year of 2010 "is what is in the back of everyone's minds", Western Australia farmer Aaron Edmonds told Agrimoney.com.

By Agrimoney.com

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