US grain futures fell Wednesday, with wheat shedding 3.3 percent, in tandem with other commodities as the dollar surged on concern about the lack of a solution to the eurozone debt crisis. Oil was down more than 5 percent and gold tumbled 3.6 percent as the dollar index rose 0.37 percent and the Dow Jones industrial average slumped 1.1 percent.
"It is really the risk-off trade and deleveraging that is putting pressure on these markets, said Dennis Cajigas, senior market strategist at brokerage Zaner Group. "Investors are fleeing commodities as the dollar strengthens against other currencies." Traders also said US projections for abundant global grain supplies next year left corn, soyabeans and wheat at the mercy of the swings of outside markets.
The decline in Chicago Board of Trade soft red winter wheat was the biggest for the benchmark contract in nearly a month. Corn dropped 2.3 percent, which also was its biggest drop since mid-November, and soyabeans were 1.7 percent lower. "There is just no reason for these markets to rally," said Karl Setzer, analyst with MaxYield Co-operative.
Chicago Board of Trade January soyabean futures settled down 18-1/2 cents at $11.00 a bushel. CBOT March corn fell 13-3/4 cents to $5.80-3/4 a bushel. The front-month December contract, expired down 8-1/2 cents at $5.80 a bushel.
CBOT March soft red winter wheat was 19-3/4 cents lower at $5.80-3/4 a bushel. December wheat expired down 3-3/4 cents at $5.88 a bushel. Traders said there was talk that some of the losses in grain markets were due to liquidation of positions by French Bank Credit Agricole - which said it will shutter its commodity business amid mounting pressure on lenders to curtail risky activities.
"From a volume standpoint, you don't like to lose anyone. They aren't a dominant player in grains but they are a piece of the market," said Don Roose, president and analyst for US Commodities, Des Moines, Iowa. "Their exit is another one of the institutions that are losing money in commodities and are getting out. It's telling us where institutions are going now." The volatile outside markets gave investors an excuse to shed risky assets such as grains and put money on the sidelines until the end of the year.
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