SINGAPORE: Chicago wheat and corn slid for a second straight session on Thursday, weighed down by slowing demand for US grains and concerns over Europe's debt crisis spinning out of control.
Soybeans ticked higher after sliding more than 1 percent on Wednesday as expectations of China's purchases ahead of the Lunar new year break provided a floor for prices.
"It was expected that a one-day rally would not be sustained because there are no demand fundamentals supporting corn and wheat," said Lynette Tan, an analyst with Phillip Futures in Singapore, referring to a rally on Tuesday.
"China is not expected to buy more corn for rest of the year and Japan has switched to Ukrainian corn. For wheat, the story is even more bearish."
Asian shares and the euro fell further as doubts deepened about Europe's ability to stop its sovereign debt crisis from spinning out of control, with the region's biggest nations split over the European Central Bank's bond buying role.
The focus of concern is shifting to difficulties in securing funds from money markets, where strains are intensifying due to rising government borrowing costs that have made financial institutions reluctant to buy sovereign bonds and lend to each other for fear of counterparty exposure to euro zone debts.
The Chicago Board of Trade actively traded January soy rose 0.1 percent to $11.89-1/4 a bushel by 0344 GMT. December corn slid 0.3 percent to $6.41 a bushel, while December wheat lost 0.1 percent to $6.16 a bushel.
A bearish influence on corn came from China and Japan.
Japan bought some 800,000 tonnes from Ukraine to diversify suppliers as high Chicago prices overwhelmed its usual preference for quality US corn.
And China may soon end an overseas shopping spree for corn to rebuild state reserves because of easing domestic prices and a bumper harvest, although imports are likely to resume next year due to ever-growing demand.
In the wheat market, Algeria's state grains agency purchased between 400,000 and 500,000 tonnes of wheat in a tender on Wednesday thought likely to come from South America.
"The firmer US dollar and slow demand for US wheat weighed on prices," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia in a daily note.
"Further forecast precipitation for the US hard red winter wheat belt also weighed."
The market is closely watching Saudi Arabia, which will issue a tender by the weekend to purchase 275,000 tonnes of wheat.
For soybeans, there is talk that China is stocking soybeans ahead of the high-demand Lunar new year break at the end of January which is likely to support prices.
China, the largest soybean buyer, is likely to raise soybean imports in the final quarter of 2011 despite recent indications of an import slowdown, Hamburg-based oilseeds analysts Oil World said earlier this week.
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