PARIS/BEIJING: US wheat, corn and soybean futures extended morning losses on Tuesday after a weak open on European markets, mainly due to a lack of fresh supportive fundamentals, traders said.
European markets received additional pressure from the strong rate of the euro against the dollar which hampers the competitiveness of European grains on world markets.
"We have no new fundamental element and the market is still driven by economical factors," including the rate of the euro, a European trader said, also noting that operators were watching weather elements for the new crop.
The euro rose to its highest in four-and-a-half months against the dollar on Tuesday, buoyed by expectations the European Central Bank will raise interest rates next month, prompting demand.
Chicago Board of Trade (CBOT) May wheat fell 2 percent to $7.06 a bushel by 1130 GMT. CBOT May corn lost 1.3 percent to $6.77-1/2 a bushel and May soybeans declined 1.2 percent to $13.46-1/2 a bushel.
Goldman Sachs Group Inc's estimate that US farmers would plant 92.1 million acres of corn this year, a tad higher than the 92 million estimated by the US Department of Agriculture, as well as the Argentine government's hike of its corn harvest outlook (2010/2011) to 20.8 million tonnes from the previous estimate of 20.5 million tonnes weighed on corn prices, added Saito.
The CBOT is waiting for the USDA's planting intention report to be released at the end of this month, and there could be no clear trading guidance before the issuance, said Liang Yong, an analyst with Galaxy Futures.
China Grain Reserves Corporation (Sinograin), which manages central government grain reserves, on Tuesday denied it had purchased any US corn, deflating rumours in the domestic market.
Talk that China has purchased a large volume of corn helped drive up CBOT prices by more than 10 percent last week. But the market largely shrugged off the denial.
"Expanding corn imports is a trend for China, and if China doesn't import for now, local supply will tighten," Liang said.
Front-month May on Euronext milling wheat futures were down 5.00 euros or 2 percent at 221.00 euros a tonne by 1130 GMT.
"Operators remain concerned and have a hard time assessing the impact of the geopolitical tensions in Libya and Japanese earthquake on commodities," French analyst Agritel said.
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