Angela Merkel and Nicolas Sarkozy have hammered out a deal, but will the rest of the eurozone agree? And is it any good?
Top of the agenda for financial markets on Thursday (more important even than weekly US crop export sales data) is the crunch meeting of eurozone leaders to hammer another nail into the (fingers crossed) coffin of the Greek debt crisis, and prevent debt fears spreading further to the likes of Italy and Spain.
An eleventh-hour agreement between the German and French leaders, the key players, improves the chances of a deal, although with no details yet available the markets found it difficult to judge.
Talk is of a potential E71bn bail-out fund from global lenders, and of a E50bn tax on eurozone banks to raise cash for buying back Greek sovereign debt (of which some E350bn is outstanding).
Chinese cloud
Whatever, the uncertainty over the summit, plus America's failure to find a permanent solution to its debt ceiling, injected an air of caution into markets on Thursday.
Tokyo's Nikkei share index closed all of 0.04% higher.
But, at least from commodities' point of view, it fostered a strengthening in the euro, and weakness in the dollar, down 0.3% against a basket of currencies, providing some support to the appeal of dollar-denominated assets.
Which was helpful when HSBC data showing manufactured in China, a huge consumer of raw materials, shrinking this month for the first time in a year, throwing a cloud over the copper market.
Premium to hang around
Farm commodities were lower too in early deals, before finding some support from the dollar and weather models which, in some cases, still see well-above-normal temperatures hitting the Midwest again towards the end of the month – even if the European model has turned its back on such an idea.
"For corn, the current risk premium is likely to remain for at least a month, until the market can gauge what US corn yields look like," Australia & New Zealand Bank said.
"Anything but a well-below trend yield for US corn is likely to see prices for the December contract break quickly to $6.00 a bushel."
In fact, the lot was 0.3% higher at $6.79 ¾ a bushel as of 07:45 GMT (08:45 UK time), recovering from an early low of $6.68 a bushel reached as doubts over demand took a bite too.
"Asian imports have slowed due to the return of higher corn prices and many are already well stocked for the next few months," Lynette Tan at Phillip Futures said.
Sowing talk already
Wheat did even better, adding 0.6% to $7.01 a bushel for September, supported by weather concerns too.
"While it is still way too early to start talking about planting conditions for the US winter wheat crop, the weather pattern for the southern Plains just does not seem to want to change," said Dave Lehl at Benson Quinn Commodities, referring to the hot and dry pattern which has stuck around since last year.
In Europe, "excessive rains in parts of France and Germany help to create a quality concern mindset" although high-protein Minneapolis spring wheat for September gave back a little premium gained in the last session, adding 0.2% to $8.54 ¼ a bushel.
'Sellers are rare'
And, indeed, European prices have helped Chicago by proving resilient too in the face of bargain prices from the neighbouring former Soviet Union.
"Prices still remain firm because sellers are rare, waiting for harvests to resume," Agritel, the Paris-based consultancy, said, estimating that 57% of French wheat area remains to be harvested, equivalent to 62% of volumes.
"Weather forecasts show improvements for the week-end and next week which should allow farmers back in their fields."
Export talk
Still, for once soybeans stuck their neck out too, adding 0.5% to $13.84 ¾ a bushel for August delivery, and the same to $13.91 a bushel for November, eschewing their recent tendency for minimal moves.
Continued talk about a pick up in US exports improved sentiment.
"A 4m-bushel new crop soybean sale to an unknown destination yesterday, and China bought 8.1m bushels of new crop soybeans on Wednesday. Do they know something?" Mike Mawdsley at Market 1 asked.
"Interesting we are seeing purchases near the contract highs."
Data later
Not that these sales were in time to be included in the weekly US export sales data, due later, expected to show a soybean figure of 400,000-550,000 tonnes old crop and new, down from last week's 656,000 tonnes.
Grains are seen showing smaller sales too, thanks to higher prices, with corn's seen at 900,000-1.4m tonnes, down from 1.68m tonnes, and wheat's at 300,000-500,000 tonnes, compared with 519,000 tonnes last time.
Cotton's will be telling too, with another week of negative sales – cancellations have beaten new orders in seven out of the last nine weeks, new crop included – likely to prove a further depressant to prices.
Traders were not taking any chances, sending New York's December lot down 0.7% to 100 cents a pound exactly.
