US corn, wheat slide over 1pc on Europe worries

Asian shares fell, while oil and metals lost ground after European stocks tumbled 4 percent on Monday, with financial shares falling to their lowest in more than two years.

Still, concerns over hot and dry conditions in the US Midwest which are threatening to reduce crop yields and tighten global corn supplies underpinned the agricultural markets.

"Losses in the Chicago grain and oilseed complex are following the risk activity that we saw in London and European markets," said Luke Mathews, a commodity strategist at Commonwealth Bank of Australia.

"It is continuation of the general risk aversion which has started to flow through the wider financial markets on Friday."

Chicago Board of Trade benchmark December wheat fell 1.1 percent to $7.66-3/4 a bushel by 0332 GMT and December corn lost 1.1 percent to $7.51-1/2 a bushel. November soy slid 1.4 percent to $14.25-3/4 a bushel.

Adding to the gloom are worries that the United States may be sliding back into recession, a concern heightened by a slew of downbeat data, most recently employment figures that showed the world's top economy failed to create any jobs last month.

The market is expecting the US Department of Agriculture to lower is corn output estimate in its monthly demand and supply report due on Monday.

"Production concerns are very significant for the US corn and soybean crops," said Mathews.

"We have started to see private estimates suggesting that the US corn crop will be downwardly revised by the USDA next week and on top of that we have seen further adverse weather in the past 48 hours with widespread flooding through Delta states of the united States."

Estimates of the US corn crop fell as temperatures heated up last weak.

On Friday, market sources said prices had been buoyed by talk of crop forecaster Lanworth issuing a new forecast for average US corn yields of 143 bushels per acre. Lanworth, a unit of Thomson Reuters, declined to comment.

Commodity brokerage firm INTL FCStone estimated this year's US corn yield at 146.3 bushels per acre (bpa), down 4.5 percent from its previous estimate of 153.2. It put the corn harvest at 12.350 billion bushels, down 5 percent from its Aug. 2 forecast of 13.002 billion.

It also lowered its US soybean production estimate by 3.6 percent to 3.030 billion bushels from its previous forecast of 3.145 billion.

Forecasters said there were some beneficial rains over the weekend but it was too little to fully alleviate crop concerns.

"There were some beneficial rainfall over the weekend for late filling corn and soybeans although it remains quite dry in parts of central Illinois and Indiana," said Mike Palmerino, an agricultural meteorologist with Telvent DTN.

"Very hot weather in the dry areas last week further stressed filling corn and soybeans."

A forecast for a record output in Brazil was also weighing on soybean prices -- which rose 1.5 percent last week in the market's fourth straight week of gains.

Brazilian grains analysts Celeres said on Monday it expects the country's 2011/2012 soy crop to reach a record high 75.2 million tonnes, the same forecast as in August.

If confirmed, the crop will beat last year's 74.9 million tonnes, the current record. The total area planted with soybeans is also expected to rise in the 2011/2012 crop year.

Copyright Reuters, 2011