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Evening markets: ag commodity markets cheer Greek resolution

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A Greek tragedy, over its latest handling of the debt crisis, turned farce as the country withdrew plans to hold a referendum over its latest rescue deal, a poll which had so angered other European countries.

This act of the drama saw George Papandreou, Greek prime minister, appear within minutes of resigning, only to saw the referendum plans had been scrapped instead, following an agreement between government and opposition to back the plans.

"If we have consensus, then we don't need a referendum," Mr Papandreou, still prime minister, (as of 19:00 GMT anyway) said.

Financial markets breathed big sighs of relief, helped too by 0.25-point cut to eurozone interest rates.

Risk-on

Indeed, the market reaction was pretty predictable, with Wall Street

shares

up 1.7% in late deals, while the safe haven of the

dollar

showed a sharp retreat to stand down 0.4%.

With the dollar's fall improving the affordability to foreign buyers of dollar-denominated assets, in addition to the broad sentiment boost, commodities traded higher.

Brent

crude

was 1.53% higher, back above $110 a barrel, while the CRB commodities index gained 1.2%.

And many farm commodities did even better.

'China rumours…'

Chicago

soybeans

, for instance, closed up 2.2% at $12.19 ¼ a bushel for November and 2.0% at $12.27 ¼ a bushel for the better-traded January contract.

The rise was helped by forecasts for rain in the US, slowing the late harvest, besides a slowdown in deliveries against the expiring November contract to nine – from 700 on the first day of the expiry process.

Smaller deliveries imply that sellers can get a better deal on cash markets.

And while weekly US export sales of 209,000 tonnes – less than one-third of some estimates - were widely derided, there is still talk around of purchases by China.

"Rumours China is looking to secure soybean imports supported the market" earlier on, US Commodities said.

What's needed for $7 corn?

Furthermore, the market moved more definitely into pre-Wasde mode – that is, anticipating the next flagship monthly US Department of Agriculture report on world crop supply and demand, due out on Wednesday.

"There is some buying tied to next week's USDA report," Darrell Holaday at Country Futures said.

"Shorts are getting nervous about a yield adjustment lower."

That said, in

corn

"it will take 146 bushels-an-acre yield to prompt enough excitement to move the grain above $7.00 a bushel," he added.

December corn closed up 1.3% at $6.53 ½ a bushel. Weekly US corn sales were viewed generally as not bad too, at 622,000 tonnes, around the top end of market forecasts.

Shorts closed

Wheat's

export sales were just about passable, at 322,000 tonnes.

But it was the position-closing idea that really helped the grain, in Chicago at least, where speculators have a historically high net short holding in wheat contracts.

Chicago December wheat closed up 2.0% at $6.36 a bushel for December delivery.

Indeed, in Kansas and Minneapolis, where there is not such huge net short against wheat contracts, futures lagged behind. December wheat added 1.0% to $7.20 a bushel in Kansas and 0.7% to $9.17 a bushel in Minneapolis.

European contracts moved more in line with Chicago, the global benchmark, besides being helped by their proximity to the good market news, in Greece and eurozone interest rates.

Paris wheat for November added 2.2% to E193.75 a tonne, with London's November contract closing up 1.4% at £151.00 a tonne.

Lower surplus

The improved sentiment helped soft commodities too, although less so in the case of New York raw

sugar

, which closed up 0.9% at 25.65 cents a pound for March delivery.

And this despite ongoing rumours of end-user interest too, with Thomas Kujawa at Sucden Financial noting the "threat of Malaysian buying in the ether".

Cocoa

was helped by a report by Marex Spectron showing world cocoa output falling 8% to 3.937m tonnes in 2011-12, thanks to less favourable weather in West Africa, the home of the biggest producers, Ivory Coast and Ghana.

While still above consumption, pegged at 3.87m tonnes, the surplus of 32,000 tonnes is less than the record figure of 434,000 tonnes in 2010-11, and below some other estimates.

Cocoa for December gained 2.1% to $2,720 a tonne in New York, and 1.7% to £1,682 a tonne in London.

By Agrimoney.com

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