May 30, 2012 / 7:53 PM / 6 years ago

GRAINS-Europe slams markets, corn firm on weather worry

* Wheat, soybeans fall on weaker macro background
    * Falling equities, crude, strong dollar burden
    * Corn mixed on deteriorating U.S. conditions

 (Updates to include pit settlements, adds new analyst quotes)	
    By Michael Hirtzer	
    CHICAGO, May 30 (Reuters) - U.S. grains tumbled on
W ednesday, with wheat dropping for the second straight day to
the lowest in about two weeks, as a surging dollar and mounting
concerns over Europe's debt crisis triggered a broad commodities
sell-off, but corn was firm on weather worries.	
    Spot corn futures declined to a 18-month low but all other
corn contracts gained as hot and dry U.S. growing conditions
sparked a modest rally led by traders in the pits at the Chicago
Board of Trade.	
    Soybeans dropped to a one-week low as declines in other
commodities, especially crude oil and metals, pressured the
grains complex.	
    "The overall theme of the markets today is the outside
market weakness, concerning the euro. The higher dollar and
weaker energies are weighing on commodities in general," said
Greg Grow, analyst at Archer Financial Services.	
    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. Since commodities are priced in dollars, a stronger
U.S. currency boosts costs for importers.	
    "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 finished 13-1/2 cents lower at
$13.73-1/4 per bushel while July wheat settled 3 cents
lower at $6.53-3/4.  	
    Corn for July delivery ended down 3 cents at
$5.59-1/2 per bushel, lowest since December 2010, on lackluster
demand for old-crop supplies while the September and
December contracts rose on a larger-than-expected
downgrade in U.S. crop conditions.	
    Still, the gains could be short-lived, with cooler
temperatures and showers forecast, which should provide relief
to the parched crop.	
    Corn had traded lower in the electronic Globex platform
before turning higher at the open of CBOT pit trading.	
    Since last week when the CME Group instituted a new
21-hour trading day, electronic trading in grains begins at 5
p.m. CDT ( 2200 GMT) a nd runs until 2 p.m. the next day while
trading in the pits runs from 9:30 a.m. to 1:15 p.m.	
    Corn turned higher "on the combination of the crop
conditions and the exhaustion of selling interest," said
Jefferies Bache analyst Shawn McCambridge. "But it's not unusual
for crop conditions to decline this early in the growing season,
especially when conditions were so ideal coming out of
planting."	
    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 2:35 p.m. CDT (1935 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  559.50    -3.00  -0.5%  -13.5%
 CBOT soy                  1373.25   -13.50  -1.0%   14.6%
 CBOT meal                  409.90    -2.60  -0.6%   32.5%
 CBOT soyoil                 49.69    -0.48  -1.0%   -4.6%
 CBOT wheat                 653.75    -3.00  -0.5%    0.2%
 CBOT rice                 1426.50     1.50   0.1%   -2.3%
 EU wheat                   210.50    -1.00  -0.5%    4.0%
 
 US crude                    87.51    -3.25  -3.6%  -11.5%
 Dow Jones                  12,434     -147  -1.2%    1.8%
 Gold                      1565.04    10.50   0.7%    0.1%
 Euro/dollar                1.2376   -0.011  -0.9%   -4.4%
 Dollar Index              83.0320   0.5520   0.7%    3.6%
 Baltic Freight                950      -36  -3.7%  -45.3%
 	
 (Additional reporting by Julie Ingwersen in Chicago and Michael
Hogan in Hamburg; Editing by Alison Birrane and David Gregorio)

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