COMMODITIES-Brent oil down as Greek deal fades; wheat jumps

Tue Nov 27, 2012 1:23pm EST

* Brent crude oil back below 100- and 50-day moving averages

* Wheat hits 2-week high on record low rating for US crop

* Soy, corn also rally; raw sugar, arabica edge higher

* Copper erases early gain; nickel up on Indonesia exports

By Barani Krishnan

NEW YORK, Nov 27 (Reuters) - Brent crude oil prices fell for a second straight day on Tuesday as enthusiasm over a new debt deal for Greece fizzled, while wheat futures surged to a two-week high on poor U.S. crop conditions.

News of an agreement between euro zone finance ministers and the International Monetary Fund to reduce Greece's debt provided only fleeting relief to commodity markets as skepticism remained about the broader euro zone economy.

The dollar also rebounded against the euro after data showing U.S. consumer confidence at its highest since 2008. The U.S. currency's strength weighed somewhat on demand for dollar-denominated commodities.

By 12:00 p.m. EST (1700 GMT), the 19-commodity Thomson Reuters-Jefferies CRB index stood virtually flat, surrendering early gains helped by the debt deal for Greece.

Nickel, a base metal used for making stainless steel and other corrosion-resistant alloys, was the biggest gainer on the CRB, rising nearly 3 percent after news that Indonesia's nickel ore exports rose in October on buying from China.

Leading industrial metal copper was flat after initially striking a three-week high on the funding agreement for Athens.

OIL IN CHOPPY TRADING

Oil prices eased in choppy trading due to doubts about the latest attempt to address Greek debt and uncertainty about U.S. fiscal negotiations ahead of the year-end deadline.

"There is some concern that the Greece agreement isn't as much of a done deal as everyone hopes, and there are doubts it will bear fruit," said Mark Waggoner at Excel Futures Inc.

London's Brent crude fell nearly 1 percent and back below the 100-day moving average of $110.61 and the 50-day moving average of $110.55.

U.S. crude, which trades in lesser volume these days than Brent, was up slightly, hovering near $87.70 a barrel.

WHEAT SURGES ON WEAK CROP RATING

Front-month wheat futures in Chicago rose 2 percent to a two-week high above $8.67 a bushel after another record low for U.S. wheat crop ratings.

The U.S. Department of Agriculture said in a weekly crop progress report on Monday that the condition of the winter wheat crop fell to an all-time low for late November, continuing a series of lows struck this month amid persistent dry weather.

The USDA said the share of the U.S. winter wheat crop rated good-to-excellent fell to 33 percent due to dry conditions in the U.S. Plains, as the plants headed into winter dormancy.

While matching analyst estimates, the poor U.S. wheat ratings added to concerns about dwindling global stocks, already stretched following weather disrupted seasons in the Black Sea region, and expectations that adverse weather will cut yields and quality in harvests in Argentina and Australia.

"The U.S. hard red crop is looking really poor," said Andrew Woodhouse, grains analyst at Advance Trading Australasia.

"The European market is running out of stock, the Black Sea is running out of stock and now, with the U.S. production profile going down, it is very supportive for wheat."

Corn and soybean futures also traded at their highest in about two weeks. Soy rose for the third straight session and corn for the second consecutive day, bolstered by month-end investment fund buying, analysts said.

Other crops that gained included soft commodities such as sugar and coffee.

Raw sugar futures edged higher in New York trading, consolidating below the 20-cent-per-lb level, as the market digested updates from Brazil where a strong tail end to the crop is capping the potential for price gains.

Arabica coffee futures were also firm in New York trade, consolidating above Monday's 2-1/2 year low, as ample supplies weighed.