US wheat slips on harvest pressure, corn down

SINGAPORE: Chicago corn and wheat futures slid on Monday as weak economic data from China and the United States weighed, following last week's gains that were led by strong physical demand.

Asian stocks were on the backfoot as the weak economic data renewed concerns about the health of the global economy while the euro looked vulnerable before an emergency meeting to stem a spreading debt crisis.

"In terms what we are seeing in wider markets, we have crude oil trading touch lower and US dollar higher, which is continuation of risk aversion that swept through global markets on Friday," said Luke Mathews, commodity strategist at Commonwealth Bank of Australia.

"It is bearish outside influences and possibly some profit-taking after last week's rally."

The wheat market came under added pressure from harvest continuing at a rapid pace in the United States and disappointing exports last week.

Chicago Board of Trade new-crop December corn fell 0.6 percent to $6.33 a bushel by 0334 GMT, while actively-traded September wheat lost 0.4 percent to $6.49 a bushel. November soy contract rose 0.2 percent to $13.48-3/4 a bushel.

Last week, wheat gained 11 percent, snapping a five-week losing streak, and corn saw its best weekly performance in seven weeks, but trading volumes were lower as investors remained uncertain about the size of crops and fretted over the state of the US economy.

The financial markets came under pressure after US data showed the economy created only 18,000 jobs in June, well short of an expected 90,000, dashing optimism that the economy was emerging from a soft patch.

Data showing annual inflation in China accelerated to a three-year high in June also weighed on sentiment as it increased the chances that the central bank would keep raising interest rates to tame price pressures.

Speculators, including hedge funds, are exiting grain markets in droves as a year-long rally falters, slashing their bullish bets to the lowest in nearly a year, US government data showed on Friday.

The speculators cut their net long positions in Chicago Board of Trade corn futures and options by 20 percent in the week ended July 5 to the smallest since July 2010, data from the CFTC's Commitment of Traders showed.

US wheat exports were 424,150 tonnes, lowest in a month and below trader estimates, US Agriculture Department data showed on Friday.

But US corn export sales surged to a three-month high last week, topping the high end of analyst estimates, as a record drop in corn futures spurred demand.

Investors in the agricultural markers are waiting to see results from the USDA's supply and demand report on Tuesday before placing their bets.

WEATHER WATCH

The market is also keeping a close eye on the US weather as corn enters its key pollination stage with some forecasts calling for potentially crop-damaging hot-dry weather.

"There is concern that unfavourable weather may start gripping some of the US Midwest corn and soybean crops, particularly the corn crop, which starts entering that pollination stage," said Mathews.

"A little bit too early to read into those stories but certainly something that must be monitored closely."

Chinese buying has helped corn recover ground after a sell-off triggered by a bigger-than-expected planted area and stocks estimates from the US government on June 30.

Copyright Reuters, 2011