CHICAGO: US grain and soybean prices dropped on Friday in risk-off trading after data showed China's economy grew more slowly than expected in the first quarter, suggesting the country's purchases of US commodities could slow.
China, the world's largest importer of soybeans, is the top buyer of US soy and is becoming a significant importer of US corn.
Corn dropped over 1 percent, reversing course after posting two days of gains. Soybeans slipped as economic worries outweighed the price-positive influence of crop reductions in South America due to drought.
Wheat fell 2 percent on the macroeconomic factors as well as persistent reminders of the global glut of wheat, especially feedwheat.
"Outside markets, with the dollar up, are weighing on commodities, Chinese growth at 8.1 percent may have been a bit of a disappointment to some," said Sterling Smith, analyst for Country Hedging.
Corn prices also were hit by outlooks for crop-friendly rainfall by the weekend extending into next week in drier areas of the US Midwest Corn Belt.
"The moisture that is coming in is a little bearish. It is expected in the dry areas so that will help out newly planted corn," Smith said.
CBOT May wheat was down 15-3/4 cents at $6.23-1/2 per bushel, May corn was down 8-1/4 cents at $6.29-1/4 and May soybeans were down 4-1/4 at $14.36-3/4 a bushel.
China's economy grew an annual 8.1 percent in the January-March quarter, less than the 8.3 percent economists had forecast and nearly a three-year low, raising investor concerns that a five-quarter long slide has not bottomed.
"The weaker-than-expected Chinese GDP number has resulted in a sell-off in just about all risk assets. Australia dollar, crude oil, are all sharply lower, and CBOT wheat and corn are following that pattern too," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.
As well as being a driver of the wider global economy, China's growth is closely watched by grain markets because of its huge consumption of staples like soybeans and corn.
On Friday, the US Department of Agriculture reported another sale of 165,000 tonnes of US soybeans to China for delivery in the new-crop 2012-13 marketing year that begins on Sept. 1.
This was the third soybean sale of the week to China, totaling 445,000 tonnes for the week, and almost all was for delivery in the new-crop marketing year.
Chicago traders said there was talk late this week that China had bought US corn, but there has been no confirmation of that from the USDA.
Corn and wheat markets also were put on edge this week by a cold snap in the US Midwest that may have harmed some of the early emerging corn and the early maturing wheat.
But significant crop losses are not likely, traders said.
Now, traders are dealing with outlooks for a soggy spell in the US heartland that likely will slow corn plantings but add valuable soil moisture ahead of the big US corn growing season.
Corn planting started the season at a record 7 percent completion pace, as of Monday, due to an unusually warm late winter and early spring.
Wet weather will blanket most of the US Midwest by the weekend and into early next week. While that could delay corn plantings it should add valuable soil moisture.
"There is a good chance most of the Midwest will receive 1 to 2 inches of rain over the next five days and there is more rain expected at the end of next week, so there won't be much fieldwork done," said John Dee, meteorologist for Global Weather Monitoring.
Dee said the cold snap this week that dropped temperatures below freezing may have harmed some early planted corn and some of the more mature wheat.
"There wasn't any widespread disaster but some farmers that planted corn really early may have some burned back, but it usually recovers pretty quickly," Dee said.
Dee said the coldest weather next week would be confined to the northern Midwest, which is normal for this time of year.
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