US wheat down 2.4pc as stock markets tumble

KANSAS CITY: US grain prices tumbled on Thursday as investors fled to safe havens such as gold amid renewed concerns over global growth, with wheat sliding more than 2 percent to snap its longest rally in six months.

Most commodities markets fell as the Dow plunged more than 4 percent and the dollar surged 1 percent after a slew of data reinforced concerns that sputtering US economic growth could halt.

Fundamentals remained mostly bullish for wheat, corn and soybean futures, but the economic concerns and corresponding selloff in equities outweighed those factors, traders said.

"We're watching the outside markets. We're going to run with the outsides, nothing has changed today in grain fundamentals," said Joe Bedore, CBOT floor manager for trade house FC Stone.

Economic fears tend to weigh on grains by raising demand concerns. Crude oil also affects grain prices because of the use of crops in biofuels, while a stronger dollar adds pressure by making commodities priced in the US currency more

expensive to holders of other currencies.

At 11:03 a.m. CDT (1603 GMT), Chicago Board of Trade September wheat was down 17-1/2 cents, or 2.4 percent, at $7.10-1/4. It rose on Wednesday to $7.39-1/4, the highest since mid-June.

CBOT September corn lost 11-3/4 cents, or 1.7 percent at $6.99-3/4, while the December corn contract fell 1.7 percent as well to $7.13. September soybean futures dipped 11-1/4 cents, or 0.8 percent, to $13.45-1/2 and November soy lost 0.8 percent at $13.55-1/2.

US wheat prices rose on Wednesday for a seventh straight session, matching the longest rally since January.

Wheat prices have been supported by improved export prospects for US supplies and growing production concerns for spring wheat, following a disappointing winter wheat harvest. Poor seeding conditions for the new US winter wheat crop, to be seeded this autumn, also are supportive.

But bears were in control on Thursday as US stocks tumbled after data showed factory activity in the US Mid-Atlantic region unexpectedly fell to the lowest level since March 2009.

Also bearish for soybeans and corn, light rainfall and moderate temperatures forecast through early next week in the US Midwest should benefit both crops.

And weekly export sales of wheat, beans and corn came in lower than trade expectations.

Wheat futures remained underpinned by detrimental harvest conditions for the spring wheat crop and reports of low yields, and by a lack of adequate soil moisture needed for planting of the new US winter wheat crop.

Copyright Reuters, 2011