Forexpros – U.S. grain futures came off their highest levels of the session during European morning hours on Monday, as optimism surrounding Greece elections over the weekend began to fade and investors shifted their focus to Spain’s deteriorating financial situation.

Agricultural commodities rallied during the Asian trading session, as market sentiment was lifted after exit polls showed a slim victory for pro-austerity party New Democracy in weekend elections in Greece, easing fears the debt-laden country would leave the euro zone.

Conservative New Democracy leader Antonis Samaras will begin forging a coalition government later in the day after results projected the pro-bailout party as the winner in Sunday’s crucial parliamentary elections, edging out the anti-austerity Syriza party.

Initial results from the Interior Ministry indicated that the pro-euro New Democracy party had gained 29.7% of the vote, with Syriza coming a close second with 27%.

The party would now have three days to form a governing coalition after gaining 129 seats out of the 151 seats it needs to lead the 300-seat government, according to the initial results.

Market sentiment had been roiled in recent weeks amid growing fears over an imminent Greek exit from the single currency bloc.

However, investors remained cautious as Greece’s immediate fate remains uncertain. This week will see the second attempt in as many months for the Greek parties to form a coalition, after voters failed to conclusively back a new government in a parliamentary election on May 6.

In addition, investors have been increasingly anxious over rising borrowing costs for Spain and Italy, amid fears they will be the next euro zone countries to require international bailouts.

The yield on Spanish 10-year bonds climbed to a euro-era high of 7.13% earlier in the day, above the critical 7% threshold which prompted bailouts in Greece, Ireland and Portugal.

The spike in borrowing costs came in spite of efforts to insulate Madrid from the effects of the ongoing sovereign debt crisis by agreeing on a EUR100 billion aid package for Spanish banks.

Spain became the fourth euro zone nation to seek a rescue last week. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.

Later in the day, a two-day G-20 summit was set to begin in Mexico, amid hopes it could produce fresh measures to combat the crisis in Europe.

Grains came under heavy selling pressure Friday, with corn prices dropping more than 3% and wheat futures slumping to a one-month low as investors cut their exposure to risky assets ahead of the weekend elections in Greece.

On the Chicago Mercantile Exchange, corn futures for July delivery traded at USD5.8338 a bushel, gaining 0.55%. It earlier rose by as much 0.85% to trade at a session high of USD5.8688 a bushel.

Some bargain buying supported prices after falling to an almost two-week low on Friday. Wall Street investment firm Goldman Sachs said in a report last week that it sees corn prices climbing back to USD6.90 a bushel this summer.

“The downside to current new-crop prices is limited given ongoing dry weather conditions in the U.S., with the USDA reporting [a] lower crop conditions rating,” the bank said in a report.

The U.S. produced 38% of the world’s corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain.

Prices have been well-supported below the USD6.00-level, amid speculation lower prices would encourage top consumer China to boost purchases of U.S. corn.

Elsewhere, wheat for July delivery traded at USD6.1713 a bushel, jumping 1.15%. It earlier rose by as much as 1.45% to trade at a daily high of USD6.1938 a bushel.

Wheat prices continued to draw support from concerns over declining production in China after the nation’s official think-tank revised down estimates on the country’s winter crop to 111.7 million tonnes from a previous forecast of 114 million tonnes.

The downbeat crop outlook raised speculation that China will increase its imports of U.S. wheat to make up for the shortfall.

The Asian nation bought 110,000 metric tons of U.S. soft red winter wheat last week, its largest single purchase of that class of wheat in more than eight years.

Meanwhile, soybeans futures for July delivery traded at USD13.8550 a bushel, gaining 0.7%. It earlier rose by as much as 0.95% to trade at a daily high of USD13.8963.

Soy prices found support after the USDA announced sales of 1.005 million metric tonnes of soybeans in the previous session, the most in five weeks and higher than the total of the two previous weeks combined.

Most of the sales went to top consumer China. The Asian nation is the world’s largest soybean consumer and is expected to account for nearly 60% of global trade of the grain in the 2011-12 season, according to the USDA.

Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.

Market participants were awaiting the release of the USDA’s weekly crop progress report due out after Monday’s closing bell on the CBOT.

In its last crop condition report, the USDA said 66% of the corn crop was in good-to-excellent condition, down from 72% the previous week and below the 69% rating a year ago.

The USDA also said soybean conditions dropped to 60% good-to-excellent from the previous 65%, while winter-wheat crops were rated 53% good-to-excellent, compared to 52% the previous week.