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Morning markets: crop data and Greece hopes sideline sellers

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Plus signs returned to grain future markets after what seems to have been an extended summer break, although the figures following them pointed to only a modest rebound.

Broader financial sentiment was better than of late, helped by expectations that Greece's parliament will, when all has been ruminated, pass the austerity measures needed to secure the latest rescue package.

Tokyo shares, for instance, closed up 0.7% while the

dollar

, which has become an indicator of investor trepidation, was stable.

Copper

, one of the commodity benchmarks, recovered some of the 0.8% it lost in the last session, while, on

oil

markets, West Texas Intermediate crude was flat above $90 a barrel.

Hangover from dampness?

And grains had an extra reason to bounce, with weekly official data out overnight showing the condition of America's crops, broadly, deteriorating.

This is a factor of increased importance now the market has – nearly – completed its switch in focus from how much was planted to the health of what has been sown.

For

soybeans

, the condition of the crop fell by three points to 65% rated "good" or "excellent", a touch lower than the 67% a year ago too.

"The soybean crop is likely showing some effects of being planted into extremely wet soils," Brian Henry at Benson Quinn Commodities said.

"The key to the lower ratings is likely the drier conditions being experienced in the south east and Mississippi Delta," he added, noting that "crop stress in the Delta may increase" this week thanks to forecasts for more heat.

Harvest progress

For spring

wheat

, the proportion in the top two bands fell by three points to 69%, compared with 84% a year ago, while for

corn

the drop was two points, to 68%.

A year ago, 73% of US corn was in the top two bands, with cooler temperatures being seen by some as the reason for this year's lag.

In Paris, Agritel issued a reminder that while European crops are looking better thanks to recent rains, some damage from spring drought is permanent.

"Harvests are progressing everywhere in France and show high range of yield variability, including yields that are greater than expected one month ago," the consultancy said.

"However, production is still expected significantly lower than last year."

And, in South America, rain is hampering Argentine wheat sowings, besides putting a dampener on the latter stages of the country's corn harvest.

China downer

Fundamentals didn't all go crops' way, with China, the world's top soybean importer, forecasting it will ship in 4.78m tonnes of the oilseed next month, compared with 5.38m tonnes in June and down from 4.95m tonnes in July last year.

Demand is being constrained by price caps which have forced crushing margins into negative territory.

That put a dampener on Chicago soybean futures, which or July delivery eased 0.5 cents to $13.29 ¼ a bushel as of 07:40 GMT (08:40 UK time), with the new crop November lot down 2 cents at $13.13 a bushel.

(In Kuala Lumpur,

palm oil

managed a slightly better performance, adding 0.4% to 3,053 ringgit a tonne for the benchmark September lot.)

Reports ahead

However, grains did better, with Chicago corn for July up 0.2% at $6.62 ¼ a bushel, after six successive negative closes, and keeping a smidgen ahead of the December lot, which added 0.2% to $6.28 a bushel.

The relationship of the July and December lots is being closely watched for signs of whether the tide of speculative selling is over, speculators have been especially concentrated in the old crop lot.

In wheat, Chicago's July contract added 0.4% to $6.25 ½ a bushel, while its Kansas equivalent added 0.3% to $7.30 ¾ a bushel.

Minneapolis spring wheat recovered 1.0% to $8.13 ¾ a bushel for July delivery.

An extra reason for investors to hold off selling for now is the prospect on Thursday of key US Department of Agriculture reports on American grain stocks and sowings, which present considerable scope for uncertainty.

For instance, while the consensus on corn sowings is 90.8m acres, now far off the USDA's latest figure, some analysts have the figure 1.3m acres lower, equivalent to some 200m bushels of the grain in production terms.

'Extreme heat'

Cotton

was one crop which bucked the trend.

Having gone against the grains last week, and gaining ground, the fibre lost out on Tuesday, after the US crop progress report showed a small improvement in the condition of the US cotton.

The proportion rated good or excellent rose by 1 point to 27%, despite continued warnings over drought damage in Texas, America's top cotton-growing state.

"Extreme heat in west Texas occurred over the weekend, with many areas easily breaking daily and all time records due to highs exceeding 110 degrees Fahrenheit (43 degrees Celsius)," Australia & New Zealand Bank said.

Cotton for December fell 1.7% to 119.95 cents a pound in New York, with the old crop July lot shedding 1.8% to 159.03 cents a pound.

By Agrimoney.com

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