Wheat prices fell on Thursday after eight winning sessions on the Chicago futures market as global financial markets slumped due to the euro sinking to its lowest level in more than a year. Soya fell as renewed strength by the dollar hurt export prospects for US grains, but corn rose to a fresh six-week high on continuing concerns over drought in Argentina, the world's No 2 corn exporter.
Leading commodities such as gold and copper weakened, but corn, wheat and soya were all off overnight lows as crude oil held firm on expectations of low stocks data and Iran's threats to block a vital supply route. "Right now it seems like a bit of a risk-off environment as we are seeing that across the equity markets," said Adam Davis, a senior commodity analyst at Merricks Capital in Melbourne.
"South American weather will be key in directing prices as we move ahead. It is going to be critical for corn which heads into its pollination phase." Chicago Board of Trade January soyabeans was down 0.5 percent to $11.92-1/4 a bushel at 1232 GMT, off an early low of $11.87. The contract hit $12.09 in the previous session, its highest since November 9.
Wheat for March delivery shed 0.38 percent to $6.48-3/4 a bushel while March corn added 0.16 percent to $6.43-1/2 a bushel, its highest since mid-November. The euro fell to its lowest level since September 2010 versus the dollar on Thursday as yields at an auction of Italian sovereign debt remained at levels seen as unsustainable. "Chicago wheat trading in European time is very exchange-rate directed," A German trader said.
Argentina's 2011/12 corn crop will be smaller than initially forecast due to dry weather linked to the La Nina weather pattern, although analysts say production should still reach a record high. Brazil's southernmost soya state Rio Grande do Sul will have little rain in the next fortnight, forecaster Somar said on Wednesday, putting the newly sown crop there at greater peril of losses while soya regions also remain dry in Argentina, the world's No 3 soyabean producer.
In Europe, the weak euro drove benchmark wheat prices higher in France, the continent's biggest exporter. On the Euronext exchange in Paris, the benchmark March milling wheat contract, added 1.75 euros, or 0.91 percent, to a fresh three-month high of 195 euros ($250) a tonne.
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