SINGAPORE: US wheat and corn futures extended losses on Thursday as concerns about weakening demand resurfaced and speculators turned cautious ahead of a make-or-break European Union leaders summit to resolve the region's deteriorating debt crisis.
Soybeans also dropped, after gaining for two sessions, but prices could find a floor given forecasts for detrimentally dry weather in key producing areas of South America.
Wheat slipped to its weakest in more than a week due to the prospect of an abundant crop in Australia and Canada, while corn prices could be supported by tight supply in the United States.
"It seems that for the past week, wheat is the one that has been more volatile. It's more prone to huge swings, more than corn. I think corn is supported at $5.80 level," said Lynette Tan, an analyst with Phillip Futures.
"People are thinking there could be no clear resolution from the summit. The general markets are falling, commodities are falling too."
Grains futures, like other commodities, have been weighed down by fears that a global economic slowdown triggered by the euro zone debt crisis could slash demand.
Pessimistic comments from EU paymaster Germany and new figures exposing deepening stress among Europe's banks dented financial market hopes of a turning point in the euro zone's debt crisis at the EU summit on Friday.
March Chicago Board of Trade corn futures fell 0.76 percent to $5.88.1/4 a bushel by 0252 GMT, extending Wednesday's decline, with dealers also awaiting crop report by the US Agriculture Department on Friday.
The USDA is expected to lower its forecast of US corn stocks slightly due to rising feed use and a lackluster harvest while raising soy supplies by nearly 10 percent because of poor export demand, according to analysts surveyed by Reuters.
"Actually for this round, I don't expect huge surprises. I think generally, we still know corn will be short in supply, and for wheat it is still more than enough," Tan said.
CBOT March wheat slipped 0.83 percent to $5.95-1/2 a bushel, weighed down by news that Australia was headed for a record wheat crop and that Canada's wheat crop in 2011 was bigger than forecast.
January soybeans were trading down 0.75 percent at $11.22-1/2.
Dealers speculated that Chinese demand for US soy could pick up in the face of forecasts for dry weather in South America. A forecasted dry spell was expected to stress South American corn and soybean fields.
In other markets, Asian shares and the euro drifted down on Thursday as investors fretted over whether European leaders can agree a plan to tackle the euro zone's two-year-old debt crisis.
Comments
Comments are closed for this article.