* Wheat, corn, soybean fall, tone cautious
* Eyes on EU summit, ECB rates decision
* USDA report on Friday also in view
(Updates prices, adds European trade, dateline pvs SINGAPORE)
By Michael Hogan and Lewa Pardomuan
Hamburg, Dec 8 (Reuters) - U.S. wheat and corn futures
extended losses on Thursday as dealers turned cautious ahead of
a key European Union summit to resolve the region's debt crisis
while a decision on euro zone interest rates was also awaited.
Soybeans also dropped after gaining for two sessions but soy
prices were supported by forecasts for detrimentally dry weather
in key South American soybean producing areas.
"The macro background continues to dominate today," an
analyst at Rabobank said. "Corn and wheat are held back by the
flight to safety in the dollar.
"As the dollar stays high the export situation for U.S.
farmers is poor against cheaper Black Sea grain. The market is
looking for resolution (of the debt crisis) in the EU, and
reversal of the dollar flight to quality so we can return to
grain market fundamentals."
Chicago March wheat slipped 1.1 percent to $5.93-1/2 a
bushel by 1135 GMT. March Chicago corn fell 1.01 percent
to $5.86-3/4 a bushel. Chicago January soybeans were down
0.3 percent at $11.26-3/4.
European benchmark wheat in Paris was little changed. Paris
January wheat was up 0.50 euros or 0.2 percent at 180.50
euros.
World equities nudged up and the euro held its ground on
Wednesday as a crucial period for the euro zone began, with
investors expecting the bloc's central bank to cut rates on
Thursday and its leaders to agree a plan on Friday to solve the
region's debt crisis.
The European Central Bank is also expected to unveil a new
package of bank aid, with investors looking for any hint it will
intensify its buying of bonds issued by the euro zone economies
struggling with high debt, setting the stage for a critical euro
zone summit starting on Thursday night.
The grain market mood was also restrained ahead of the
crucial global supply and demand report from the U.S.
Agriculture Department on Friday.
"The market is on hold ahead of the USDA world supply and
demand report on Friday," the Rabobank analyst said. "The corn
inventories continues to be tight with wheat stocks much looser
into the 2012/13 marketing year."
The USDA is expected to lower its forecast of U.S. corn
stocks slightly due to rising feed use and a lackluster harvest
while raising soybean supplies by nearly 10 percent because of
poor export demand, according to analysts surveyed by Reuters.
"Actually for this round, I don't expect huge surprises,"
said Lynette Tan, an analyst with Phillip Futures. "I think
generally, we still know corn will be short in supply, and for
wheat it is still more than enough."
Wheat was also weighed down by news that Australia was
heading for a record wheat crop and that Canada's wheat crop in
2011 was bigger than forecast.
Dealers speculated that Chinese demand for U.S. soybeans
could pick up in the face of forecasts for dry weather in South
America. A forecast dry spell was expected to stress South
American corn and soybean fields.
* Prices at 1135 GMT
Product Last Change Pct Move End 2010 Ytd
Pct
Paris wheat 180.25 0.25 +0.14 252.20
-28.53
Paris maize 184.25 0.00 +0.00 235.00
-21.60
Paris rapeseed 423.25 0.00 +0.00 497.25
-14.88
CBOT wheat 583.00 0.00 +0.00 794.25
-26.60
CBOT corn 576.25 -6.00 -1.03 629.00
-8.39
CBOT soybeans 1126.50 -4.50 -0.40 1393.75
-19.17
CBOT rice 14.36 -0.03 -0.17 14.00
2.61
Crude oil 100.72 0.23 +0.23 91.38
10.22
Euro/dlr 1.3434
*Front month contracts. CBOT contracts in cents per bushel
except rice which is in dollars per hundredweight. Paris
wheat in euros a tonne
(Reporting by Michael Hogan and Lewa Pardomuan; editing by
Keiron Henderson)
