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Morning markets: grains sell-off feeds on Greek debt worries

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It was hard for risk assets to make much headway in early deals, given the disappointment over efforts to sort out Greece's sovereign debt problems – increasingly viewed as a matter of global importance.

Eurozone finance ministers said they expected Greece to get E12bn in emergency loans by mid-July, but made no firm commitment – until the country makes more progress on austerity measures aimed at sorting out its problems.

The move put the euro back into reverse, and helped up the

dollar

, which jumped 0.6% against a basket of currencies as of 07:20 GMT (08:20 UK time), signalling lower prices for dollar-denominated assets, which become less competitive as the greenback appreciates.

Saudi purchase

Oil

took the bait, falling 1.6% to less than $92 a barrel in New York, and copper lost 1% in London.

But agricultural commodities were at least managing to limit their losses, with fundamental news providing some crumbs of comfort.

Wheat

, for instance, had a 360,000-tonne order from Saudi Arabia over the weekend, spread between Europe and the US, and so providing yet another signal that buyers remain cautious over Black Sea wheat, however cheap it is.

Russia is still toying with export levies, and there are some, though waning, fears over this year's Black Sea harvests, following a dry period last month.

'More heat'

There are some weather fears too, with US wheat showing heavy rains for the Upper Plains over next 60 hours", WxRisk.com said, hardly ideal for any farmer still thinking of sowing winter wheat.

There is also "more heat all this week over the Lower Plains and Deep South", which bodes badly for

cotton

crops already tested by drought.

Indeed, New York cotton for December managed to go against the run of play, adding 1.0% to 124.95 cents a pound.

It could be less than ideal for

corn

too, as an 11-to-15 day outlook showing a "much hotter and dry pattern developing for all of the Plains and Midwest for the long July 4 weekend".

'Has value'

Brian Henry at Benson Quinn Commodities held out some hope for corn, saying that the last session made it appear that some bottom may be near.

While "bulls in the corn market remain nervous of additional fund liquidation, the market traded like it had value near these prices", adding that he "would not be surprised" if margin requirements which fuelled the sell-off last time had been resolved.

Still, wheat prices felt the weight of a US harvest which Lynette Tan at Phillip Futures noted has been "topping the low expectations of market watchers who had predicted a severely reduced crop due to dry weather in the southern US Plains".

Mike Mawdsley at Market 1 said that "July 1 is normally the time of year to find a harvest low in wheat", referring to the hard red winter variety as traded in Kansas, and which lost a further 0.3% to $8.02 a bushel for July delivery.

Chicago wheat for July lost 0.6% to $6.68 a bushel.

Better hopes for Europe's harvest following rain has also been keeping a limit on sentiment, with Agritel noting that "there is now a consensus that production could be slightly better than expected".

Chart signals overcome?

And, with wheat lower, corn was undermined too. Corn's unusual premium over wheat is seen as fostering increasing pressure for a switch of grains by feed buyers.

Corn for July eased 0.3% to $6.98 ½ a bushel, with the new crop December lot down 0.5% at $6.56 ¾ a bushel.

It was left to

soybeans

, again, to show resilience, standing unchanged at $13.33 ¼ a bushel in Chicago, and with new crop lots doing a better job of holding on to weather premium than in grains.

The November contract stood 0.25 cents higher at $13.33 ½ a bushel, even after in the last session falling down through its 100-day moving average, which might be considered likely to trigger further selling.

The same went for

soymeal

too, which added $30 to $349.30 per short tonne, despite dropping through its 200-day moving average in the last session.

By Agrimoney.com

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