US wheat falls over two percent

US wheat fell over 2 percent on Monday as the dollar surged against the yen, new concerns arose over Europe's debt crisis and traders grew wary after futures trading giant MF Global filed for bankruptcy. Corn and soyabeans also eased nearly 1 percent pressured by the dollar's rise to a three-month high against the yen due to yen-selling intervention by Japanese authorities, traders said.
"I think we're seeing all three markets weakening on scepticism about the European debt situation. The path of least resistance today is down because of all the uncertainty," said Shawn McCambridge, analyst for Jefferies Commodities. Though grains ended down for the day, for the month of October wheat was up 3.4 percent, corn up 9.8 percent and soyabeans up 2.6 percent for the month
Traders said the declines in grains also may have been tied to position liquidation by the bankrupt futures broker MF Global, but this could not be confirmed. The Chicago Mercantile Exchange, which owns the Chicago Board of Trade, has limited all trading of MF Global customers to liquidation only, and said it no longer recognises the broker as a guarantor for floor trading privileges.
ICE Futures Canada also limited MF Global's trading to liquidation only as did ICE Europe. Trade sources said MF Global had a larger exposure in corn futures than it did in wheat or soyabeans. The giant futures broker melted in less than a week as big bets on eurozone debt went sour.
"It's forced liquidation across the board and their trading has been suspended. I heard it was just bad trades on their part, nothing illegal, so basically they did nothing wrong other than the bad trades," a trade source said. CBOT December wheat was down 16-1/4 cents per bushel at $6.28-1/4, December corn was down 8 at $6.47 and November soyabeans were down 9-1/2 cents at $12.07-1/2.
The waning risk appetite came as US Federal Reserve policymakers are due to hold a two-day meeting starting on Tuesday as the market looks for further initiatives to boost the moribund US economy. October US employment data due on Friday will help shape views of the economy. The G20 is also scheduled to meet this week. Investors in grain markets will remain on watch for signs that last week's 11th-hour deal to support eurozone sovereign debt will move forward - a signal that could spur them to take on more risk.