GRAINS-Corn slips for 2nd day, takes breather from drought rally
* Corn dips after hitting record top on Friday * Market eyes demand rationing, prices to remain high * USDA slashes corn crop estimate, cuts soy crop (Adds details, quotes) By Naveen Thukral SINGAPORE, Aug 13 (Reuters) - Chicago corn edged lower on Monday, giving up more ground as the market took a breather from a drought-driven rally that lifted prices to an all-time high in the last session and raised fears of a food supply crisis. Soybeans slid around half a percent after rising on Friday, while wheat extended losses to nearly 4 percent over two sessions on smaller-than-expected cuts in global wheat production. Even as corn eased, analysts said prices were expected to remain high amid tight supplies of new-crop corn, which has gained 60 percent since mid-June. On Friday, the U.S. Department of Agriculture, in its first survey-based report detailing damage from the drought, cut corn production in the United States by 17 percent, intensifying fears the world is headed for a repeat of the 2008 food supply crisis. "It is a little bit of profit-taking today and we are seeing a bit of buy the rumour and sell the fact scenario," said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia. "The fundamental picture is very bullish as the U.S. and global corn supplies are critically tight." Chicago Board of Trade new-crop December corn fell 0.5 percent to $8.05 a bushel by 0407 GMT and November soy also lost half a percent to $16.34-1/2 a bushel. September wheat lost 1 percent to $8.76 a bushel. The front-month corn hit a record high of $8.43-3/4 a bushel on Friday. The USDA pegged the U.S. corn yield at 123.4 bushels per acre, below the average trade estimate of 127.3 bushels and down from its July estimate of 146 bushels. The department has now slashed the corn yield by a total 42.6 bushels in two months. The aggressive stance reflected the severity of the damage from the drought that is centered in the U.S. Midwest farm belt, which grows 75 percent of the country's corn and soy crops that are used for food, feed and biofuels. The rally is grain prices has renewed the food-versus-fuel debate centered on the U.S. ethanol mandate as 40 percent of the corn crop will be made into fuel for cars and trucks. The Group of 20 countries are planning a meeting to coordinate a response to surging food prices, the Financial Times reported on Monday, as the worst U.S. drought in more than half a century devastates crops. G20 officials plan to hold a conference call in the week of Aug. 27 to discuss a meeting, which could be held in late September or early October, the paper said, quoting four unnamed officials familiar with the conversations. Still, the wheat market has come under pressure as the USDA raised its estimates for U.S. production and ending stocks while keeping exports unchanged. Wheat prices have dropped for the last three weeks but are up more than 40 percent since mid-June. The market was also pressured by smaller-than-expected cuts in global wheat production, especially in Russia, despite inclement weather dimming eastern Europe crop prospects. USDA cut wheat production in the former Soviet Union states by 5.6 million tonnes to 82.96 million, and dropped Russian output by 6 million tonnes to 43 million. There have been persistent rumours that Russia could curb exports to preserve supplies, as it did in 2010 when its crops were devastated by a drought. But over the weekend, Egypt, the world's biggest wheat importer, bought 120,000 tonnes of Russian wheat. The USDA U.S. corn production this year was cut to 10.779 billion bushels, below trade estimates for 11.026 billion. The soy crop was pegged at 2.692 billion bushels, below estimates for 2.817 billion. The department pegged the soybean yield at 36.1 bushels per acre, below expectations for 37.8 bushels. Prices at 0407 GMT Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 876.00 -9.25 -1.04% -4.05% 873.61 47 CBOT corn 805.00 -4.25 -0.53% -2.28% 768.74 49 CBOT soy 1634.50 -9.25 -0.56% +0.20% 1585.03 62 CBOT rice $15.84 -$0.11 -0.66% -0.50% $15.50 56 WTI crude $93.50 $0.63 +0.68% +0.15% $89.10 66 Currencies Euro/dlr $1.229 $0.000 -0.01% +0.01% USD/AUD 1.056 0.000 +0.05% -0.12% Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential (Editing by Himani Sarkar)
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DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.
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