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Evening markets: euro doubts depress crops with help from...

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There was, really, only one story in town on Wednesday. And for most of the day, it wasn't a good one.

It wasn't until after agricultural commodity markets closed that hopes that hopes of a European agreement on Greek debt write-offs, and on how far to gear up a rescue fund, looked like they might bear fruit, sending Wall Street


up 1.3% in late deals.

For most of Wednesday, commodities were fighting fears that there would be no eurozone accord, causing a rise in the safe haven of the


, which only worsened prospects for dollar-denominated raw materials, making them more expensive to buyers in other currencies.

MF downgrade

"Grain traders have been held hostage by the eurozone," Paul Georgy at Allendale said.

UK grain traders at a major commodities house said: "The most important piece of news is the fact that a debt deal has still not been reached on Greece. This is keeping the market on edge."

Still, as an extra external pressure on markets has come from MF Global, whose shares have halved since Monday, when Moody's analysts cut their rating on the commodity house's debt nearly to junk, because of its holdings of European sovereign debt.

The company's plight, followed by a warning on Wednesday from Standard & Poor's that it may cut its rating on MF Global to junk, has raised concerns that the group may ditch its commodities holdings.

Sweeter cane

Furthermore, what crop news that emerged had a bearish spin, such as the announcement by cane industry group Unica of cane


levels that jumped 11.9% in the first half of the month, compared with the same period a year ago, and so "surpassed our expectations".

New York raw sugar for March, the benchmark contract, closed down 2.2% at 26.41 cents a pound.

In grains, Egypt's latest


tender failed, once again, to attract any US bids, taken as a sign that American grain is not competitive.

In fact, Russia scooped all 120,000 tonnes of an order by Egypt, taking its total orders from the world's top wheat importer nearly to 2.5m tonnes in less than four months.

'Aggressively pushing tonnage'

And this on top of persistent talk about Ukrainian


winning orders from Japan, a major US customer, too. Ukraine has enjoyed a record corn harvest, and is now basking in the removal of export levies too.

Sure, talk about Chinese purchases of corn materialised, but really at these levels?

"China purchased corn at $5.75 a bushel basis December prior to the last report. They would probably only would consider buying corn near $6.00 a bushel," US Commodities said.

And from America? GrainAnalyst trader Matthew Pierce said: "The US needs to address a new factor for corn exports - Ukraine and Argentina.

"Combined they represent one-third of the total world export market and are aggressively pushing tonnage."

Even after a 2.1% tumble on Wednesday, Chicago corn for December remained above levels likely to entice China, at $6.37 ¼ a bushel.

Snow, then nothing

Still, this was enough to re-expand some of the premium over wheat, which tumbled 2.6% to $6.19 ½ a bushel in Chicago for December, taking umbrage at the Egypt tender results.

It dropped 2.4% to $7.16 a bushel in Kansas too, despite the exchange trading the hard red winter type which continues to look imperilled by a lack of rainfall.

"After the snow possible for western Kansas today and tonight there is nothing, and I mean nothing, behind it," in terms of moisture, Mr Pierce said.

"For the next 10-14 days temperatures moderate while precipitation disappears.

"This gives a small amount of credence to forecasters that have pointed to definitive pattern shift in the region mimicking the dustbowl of the 1920s," an idea highlighted by FCStone last week.

Wheat contracts in Europe were relatively resolute, if only because of their earlier close, before US selling really kicked in, while also protected somewhat by a sagging euro.

Paris wheat for November dropped 1.5% to E186.50 a tonne, with London feed wheat for the same month easing 0.3% to £150.50 a tonne.

Technical floor?

Back in Chicago,


proved relatively resolute, if only for the technical reasons highlighted earlier.

Mike Mawdsley at Market 1 flagged the "support area growing near $12.00-12.10 a bushel" for November soybeans, nothing that the 20-day moving average was around $12.12 a bushel and "flattening out".

The lot closed down 1.2% at $12.10 a bushel, although further losses could be in store if two points highlighted by Mr Georgy – benign South American sowing weather and squeezed Chinese crush profits – tell out.

"Rains in Brazil have aided topsoil moisture," he said, adding that "most of corn and soybean areas should receive rain in the next 10 days.

"Crush margins in China maybe one reason for their slowdown in purchases of soybeans."


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