(Corrects fifth paragraph to say 21-hour trading day, not
22-hour trading day)
* Wheat, soybeans fall on weaker macro background
* Falling equities, crude, strong dollar burden
* Corn losses limited by deteriorating U.S. conditions
By Michael Hirtzer
CHICAGO, May 30 U.S. grains fell sharply
Wednesday, with soybeans dropping more than 1 percent to a
one-week low, as a surging dollar and mounting concerns over
Europe's debt crisis triggered a broad commodities sell-off as
investors fled risky assets.
Wheat futures fell for the second straight session, touching
the lowest level in about two weeks.
Corn, which had traded lower in the electronic Globex
platform, turned higher at the open of pit trading at the
Chicago Board of Trade before edging narrowly lower again.
"You get commercial pricing when the pits open up and there
is not much there to take it. You chew through that, and then
you break again," said ABN Amro analyst Charlie Sernatinger on
the brief corn rally.
Since last week when the CME Group instituted a new
2 1- hour trading day, electronic trading in grains begins at 5
p.m. CDT (2200 GMT) and runs until 2 p.m. the next day while
trading in Chicago's historic trading pits runs from 9:30 a.m.
to 1:15 p.m.
Corn also tested its 200-day moving average and was
supported by oversold conditions as well as a
larger-than-expected downgrade in U.S. crop conditions, analysts
Still, the U.S. dollar index, which measures the
strength of the greenback against a basket of currencies, rose
to its highest since September 2010 amid the euro zone banking
crisis and slow growth in China, making dollar-priced
commodities expensive for importers.
The dollar typically has an inverse price relationship with
commodities, which are priced in dollars. So for importers a
stronger U.S. currency makes commodities cost more.
"It's a risk-off attitude," said Citigroup grains analyst
Sterling Smith. "Pick a country in Europe and pick a problem.
The Spanish banking crisis seems to be the most acute issue and
that is creating a situation where commodities in general are
selling off along with equity markets."
CBOT July soybeans were down 19-1/2 cents, or 1.4
percent, at $13.67-1/4 per bushel while July wheat was off
5-1/4 cents at $6.51-1/2.
Corn for July delivery was down 1-1/2 cents at $5.61
after trading as low as $5.53-1/2 and as high as $5.68-1/4.
Weakness in other commodities, especially crude oil and
metals, pressured the grains complex, analysts said.
"We are seeing something of a tug-of-war each day between
the depressed micro economic environment and weather conditions
especially in the Black Sea region and the U.S.," said Rabobank
analyst Erin FitzPatrick. "A lot of the moves today were based
on the depressed macros, yesterday we saw more fundamental
Russia's Grain Union on Wednesday gave an upbeat picture of
the country's upcoming crop and exports.
Traders were keeping a close eye on weather forecasts after
wheat prices came under pressure after reports of rain in dry
southern Russia since the weekend, with Russia's state
forecaster predicting more rainfall this week.
"We do have some improved weather forecasts for the U.S.
this week but the longer-range forecasts are still not very
positive," FitzPatrick said.
The U.S. Department of Agriculture's weekly crop progress
report on Tuesday said that 72 percent of the crop was in
good-to-excellent condition, down 5 percentage points from a
week ago. Analysts polled by Reuters expected the crop's rating
to drop 2 to 4 percentage points.
U.S. corn and soybean crops now need an urgent round of rain
and there are some forecasters calling for showers in the
Midwest this week.
Rain is also seen in portions of the lower Midwest,
providing critical relief to stressed corn crops in those areas,
although more will be needed to foster development. Traders said
rain was unlikely to penetrate the dry subsoils that were
slowing soybean emergence.
Prices at 10:36 a.m. CDT (1536 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 561.00 -1.50 -0.3% -13.2%
CBOT soy 1367.25 -19.50 -1.4% 14.1%
CBOT meal 405.30 -7.20 -1.8% 31.0%
CBOT soyoil 49.71 -0.46 -0.9% -4.6%
CBOT wheat 651.50 -5.25 -0.8% -0.2%
CBOT rice 1436.00 11.00 0.8% -1.7%
EU wheat 210.75 -0.75 -0.4% 4.1%
US crude 87.78 -2.98 -3.3% -11.2%
Dow Jones 12,443 -138 -1.1% 1.8%
Gold 1548.90 -5.64 -0.4% -1.0%
Euro/dollar 1.2395 -0.0091 -0.7% -4.2%
Dollar Index 82.9020 0.4220 0.5% 3.4%
Baltic Freight 950 -36 -3.7% -45.3%
(Additional reporting by Julie Ingwersen in Chicago and Michael
Hogan in Hamburg; Editing by Alison Birrane)