US wheat futures plunged on Friday to their lowest in more than three months as a massive earthquake in Japan heightened concerns about the global economy and reinforced a recent pullback in grain prices. Oil prices fell sharply and European stocks hit a three-month low as news of the earthquake and a subsequent 10-metre tsunami added to fears among investors already nervous about the fallout from unrest in Arab countries, debt problems in the euro zone and inflation in China.
Chicago wheat futures shed as much as 5 percent to touch a new low since December 1, while corn futures slipped more than 4 percent to their lowest level since January 31. "Everything (in commodities) will be down because of this quake in Japan. That will impact the global growth of the economy and will weigh on commodities," said fund manager Romain Lathiere of Diapason Commodities Management.
The devastating earthquake in Japan added to a bearish mood in markets, partly fuelled by upheaval in the Middle East, where leading oil producer Saudi Arabia was the latest country to face protests. "The unrest which is seemingly spreading to Saudi Arabia is further negative information for the commodities complex, outside of crude oil of course," said Luke Matthews, a commodity strategist at the Commonwealth Bank of Australia.
Wheat was also being pressured by an unexpected increase on Thursday in the US Department of Agriculture's outlook for US and world wheat stocks. "The wheat market has suffered significantly at the hand of the bearish USDA report," Matthews said. "The 4 million tonnes of increase to global wheat supplies has certainly supported the selloff that we have seen in the last three to four sessions." Chicago Board of Trade May wheat fell 3.48 percent to $7.14-3/4 a bushel by 1250 GMT. CBOT May corn was down 3.04 percent at $6.62.
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