KUALA LUMPUR: US corn declined for a fourth day on Monday because of euro zone debt worries and increased supply as the United States harvested its crop, and other food grains also fell as the global uncertainty kept investors away from riskier assets.
A potential failure of a US debt reduction plan also clouded the outlook for a rebound in commodity demand, pushing wheat lower.
"The European debt crisis means investors are putting money into lower-risk assets, which are not commodities," said Malcolm Bartholomaeus, a senior grains analyst at consultancy Profarmer Grain in Melbourne.
"What's having a negative impact on crude oil is also putting a dampener on prospects for grains because of lower demand for bio-fuels."
Chicago Board of Trade (CBOT) corn for December delivery slipped 0.5 percent to $6.07-1/2 per bushel, falling for a fourth straight session.
Wheat for December delivery fell 0.2 percent to $5.97 per bushel after tumbling 3.3 percent last week because of euro zone concerns and abundant global supplies.
Soybeans for January delivery, the most active contract, lost 0.1 percent to $11.67-1/2 per bushel.
The grains were tracking Asian shares, which fell on Monday as uncertainty remained over how euro zone leaders would respond to mounting funding difficulties for European banks, and an apparent failure by US politicians to agree on deficit reduction hurt sentiment.
Brent crude traded at $107.66 a barrel, up 10 cents, by 0450 GMT. Futures had fallen in the previous three sessions, paring this year's gains to 14 percent. US oil climbed 11 cents to $97.78. Prices have increased 4.8 percent this month after an 18 percent jump in October.
From China to Britain, officials said their economies are feeling the pain of Europe's sovereign debt troubles.
The crisis in the euro zone is having a "chilling effect" on the British economy, Prime Minister David Cameron said on Monday.
Chinese Vice Premier Wang Qishan warned that a lasting global recession is certain to happen. The comments, published by the official Xinhua news agency, were the most bearish forecast ever by a top Chinese decision-maker about the world economy.
CBOT December wheat is expected to end the current weak rebound at about $6.06-3/4, and to fall to the Nov. 18 low of $5.86-1/2 per bushel, according to Reuters technical analyst, Wang Tao.
Chinese government purchases of soybean for state reserves, which have pushed up CBOT prices, angered some commercial buyers in the world's largest soy importer, according to a media report.
Sinograin, which manages state reserves, has since October purchased twice from the United States, purchasing about 1.2 million tonnes. Its latest purchases pushed up CBOT prices 2 percent on Nov. 16. China buys about 60 percent of global soy trade.
CORN HARVEST
Sowing of Argentina's 2011/12 soy advanced at a fast clip over the last week because of good soil moisture in the main farm areas, the government said in a report on Friday.
Large speculators shifted to a net short position in Chicago Board of Trade soybean futures and options for the first time in 16 months as global economic woes dragged grains markets lower, according to regulatory data released on Friday.
The Commodity Future Trading Commission's weekly Commitments of Traders report also showed that non-commercial traders slashed their net long position in corn in the week ended Nov. 15 and increased their net short in CBOT wheat.
China expects domestic corn prices to remain mostly stable as both the government and state-owned grain companies start to stockpile corn following a bumper harvest, the State Grain Administration said on Friday.
US DEBT PLAN
After more than two months of talks, the US congressional deficit-reduction committee may concede failure, unable to bridge deep partisan differences over taxes and spending going into the 2012 elections. Panel members must vote on any deal by Wednesday.
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