BLBG:Wheat, Corn Decline as Europe Debt Crisis Cuts Investor Demand
Wheat and corn dropped, tracking losses in Asian equities, as concerns that the European debt crisis may worsen prompted selling by some investors.
March-delivery wheat fell 0.5 percent to $6.47 a bushel on the Chicago Board of Trade at 2:19 p.m. Singapore time. Corn for March delivery slipped 0.2 percent to $6.5725 a bushel, erasing an earlier gain of 0.2 percent.
Asian stocks snapped a two-day rally and extended a global decline as Greek Prime Minister Lucas Papademos said yesterday that without a deal with the European Union, International Monetary Fund and European Central Bank, the nation “faces the immediate risk of a disorderly default” in March.
“The way agricultural prices are most influenced by Europe is how speculators react,” Paul Deane, a senior agricultural economist at Australia & New Zealand Banking Group Ltd., said by phone from Melbourne. “A lot of the damage they can do from liquidating their positions fast has been done. Still, that can put underlying pressure on agricultural commodities.”
Corn prices may rebound, as the market awaits the next U.S. Department of Agriculture estimates on global supply amid dry weather that threatens to parch crops in South America, Deane said. The USDA report is due on Jan. 12.
Corn is most at risk from the dryness in South America caused by the La Nina weather event, said Morgan Stanley, citing a conference call with Michael Cordonnier, president of forecaster Soybean & Corn Advisor Inc.
Production in Argentina may drop to 25 million metric tons in 2011-2012, 4 million tons below the U.S. Department of Agriculture’s estimate (US09PRAR), Morgan Stanley cited Cordonnier as saying in an e-mailed report dated yesterday. About 20 percent of the nation’s corn area remains unplanted with only 10 days left before the normal planting window closes, it said.
“The weather concerns certainly do exist and persist today,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone from Sydney today. Argentina’s output may be “significantly below what the USDA estimated,” widening the global production deficit, he said.
Soybeans for delivery in March were little changed at $12.305 a bushel.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
