Tumble on fund selling as frost worries ease

CHICAGO: US grain and soybean futures tumbled on Thursday on active fund selling after easing worries about crop-damaging frost in the US Midwest pushed prices below key technical levels, accelerating liquidation.

Corn fell nearly 3 percent and soybeans shed about 1.5 percent in a fourth straight day of declines. Both hit one-month lows after breaking below their 50-day moving averages.

Wheat dropped more than 2 percent following declines in corn and soy and as rain in the drought-scorched southern US Plains tempered fears of a steep drop in winter wheat seeding.

Crop damage from freezing overnight temperatures in northern sections of the US Corn Belt appeared to be lighter than anticipated, adding to bearish sentiment in grains markets stemming from easing demand.

Uncertainty about how widespread any frost damage to immature corn and soybeans could be had limited some selling earlier in the week, but that selling appeared early on Thursday to guide prices lower, traders said.

"The temperatures were not as cold as forecast last night so there was less frost damage than had been expected. Yield reports out of Iowa and parts of Illinois have also been better than expected," said Alan Kluis, president of Kluis Commodities.

Chicago Board of Trade benchmark December corn fell 2.9 percent to a five-week low of $7.03-1/4 a bushel by 12:06 p.m. CDT (1706 GMT).

There was chart support around $7 a bushel, a level that has not been breached by spot-month futures since Aug. 19.

Corn fell despite US export sales rising last week to a two-month high of 1.17 million tonnes, according to the US Agriculture Department, topping trade expectations.

November soybeans fell for a fourth consecutive day, shedding 1.6 percent to $13.61 a bushel, the lowest since Aug. 19. Technical selling below the 50-day and 100-day moving averages accelerated the break.

Drought conditions persisted in the southern US Plains Wheat Belt, but scattered rain and milder temperatures on Thursday offered some relief.

Still, soil moisture reserves in much of the region remain well below normal, particularly in Texas, so far more rain was needed.

CBOT December wheat fell for the seventh time in eight sessions, sinking 2.2 percent to a 5-1/2-week low of $6.89-1/4 a bushel.

Copyright Reuters, 2011