BLBG:Wheat, Corn Slide for Second Day as Investors Shun Risk Amid Debt Crisis
Wheat and corn fell for a second day in Chicago as investors shunned risk amid mounting concern that Europe’s sovereign-debt crisis may spread and U.S. legislators’ failure to agree on deficit reduction.
The dollar strengthened for a third day, making crops priced in the currency more expensive in terms of other monies. Italian and Spanish 10-year bonds dropped, while U.S. and German government debt gained. Equities declined in Europe and Asia, and futures indicated that U.S. benchmarks will retreat when trading begins in New York.
“The price action that we’re seeing in the grains market is likely the result of the continuing risk-off mood that is engulfing the wider financial market,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone from Sydney today.
Wheat for September delivery slid 20.75 cents, or 3.2 percent, to $6.185 a bushel by 10:58 a.m. London time on the Chicago Board of Trade. The grain has tumbled 21 percent since the end of May on speculation that farmers in the U.S. planted more than originally expected.
Milling wheat for November delivery traded on NYSE Liffe in Paris dropped 5.50 euros, or 2.9 percent, to 185.25 euros ($257.85) a metric ton.
Corn, Soybeans
Corn for December delivery declined 18.5 cents, or 2.9 percent, to $6.1425 a bushel in Chicago. The grain has plunged 18 percent since the end of May.
November-delivery soybeans fell for the first time in seven sessions, sliding 10.5 cents, or 0.8 percent, to $13.365 a bushel. The oilseed has dropped 5.2 percent since the end of March.
U.S. President Barack Obama urged Republican leaders to compromise on their opposition to tax increases and achieve “the largest possible deal” to cut the federal budget deficit. Warnings by Moody’s Investors Service and Standard & Poor’s over Italy’s ability to finance its debt contributed to an Italian selloff.
Such concerns “have certainly resulted in just about all risk assets selling off over the past 24 hours,” Commonwealth Bank’s Mathews said. “It looks like that theme has continued today.”
He also said the U.S. Department of Agriculture may today raise its estimates for the nation’s corn and wheat stockpiles, helping push global supplies higher. That would add to bearish sentiment on the grain market, according to Mathews.
The agency is scheduled to release estimates on agricultural supply and demand, including corn, wheat and soybeans at 8:30 a.m. in Washington today.
To contact the reporters on this story： Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Tony C. Dreibus in London at tdreibus@bloomberg.net.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
