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Evening markets: grain prices rebound with hopes for Greece

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So George Papandreou, the Greek prime minister, is to survive a no-confidence motion.

And that will clear the way for the further austerity measures the country needs to secure a E12bn rescue package backed by other eurozone states.

That, at least, was the scenario being bet on in financial markets, where risk assets across the board had a more positive day.

London shares closed up 1.4%, while Wall Street stocks were up more than 1% in late deals.



, investors' favoured safe haven, fell 0.6% against a basket of currencies as confidence improved. A weaker dollar improves the competitiveness of dollar-denominated assets, including many commodities.

And many raw materials, including grains, enjoyed their most solid progress for quite some while.

Weather worry

Buying was encouraged by technical signs, given the extent of the recent declines, which had seen Chicago wheat, for instance, lost $1 a bushel over six sessions, and touch its lowest level since the start of December.

"The market has taken a great deal of risk premium out of the market. The market is now deeply oversold," US Commodities said, also noting a key report due next week on US crop sowings - the prospect of which might be encouraging many investors to take a cautious stance.

Also, the weather took a turn for the worse, with analysts taking increasing notice of the prospect of hot weather early next month, a forecast highlighted on Monday by

"The US weather looks a bit more threatening. Some forecasters have a ridge in the 11-to-15 day outlook that stays. Others have it staying for 2-3 days, then the jet stream flattens," US Commodities said.

"We do not need the pattern to go dry with shallow roots."


crops will hardly have been encouraged by the excess moisture of late in the Corn Belt to forage deep for water.

Chicago vs Kansas

Furthermore, the threat of flooding has stuck around, posing a number of crop threats, including to the soft red winter


crop (the type traded in Chicago), while rains further south are seen holding up a hard red winter wheat harvest which has so far beaten the historical pace.

Chicago's July contract soared 2.3% to $6.74 ¼ a bushel with its Kansas hard red winter peer, which does not attract as much speculative interest (for which read short-covering this time) adding a more modest 0.3% to $8.03 ½ a bushel.

In Europe, Paris wheat for November added 0.4% to E212.50 a tonne, while its London peer gained 0.9% to £174.00 a tonne.

'Not a bullish sign'

Back in Chicago, corn gained 1.0% to $7.07 ½ a bushel for July, maintaining a premium over Chicago wheat, but losing quite some ground against the new crop December corn lot, which added 3.0% to $6.80 ¼ a bushel.

This worried Darrell Holaday at Country Futures as to the sustainability of Tuesday's rebound.

"The strength in all of the grains would be more impressive if the old crop/new crop spreads were gaining in value. Instead they are losing value," he said.

"That is not a bullish sign."

At least


did a better job of distributing gains more equally, adding 1.0% to $13.48 ¾ a bushel for July delivery, and 1.1% to13.49 3.4 a bushel for the new crop November contract.

And New York


achieved a mega version of the so-called bear spread, standing up the exchange maximum of 6.0 cents, at 154.73 cents a pound, in late deals for July delivery, while the new crop December cotton fell 0.2% to 123.87 cents a pound.


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