Chicago soybean extends losses amid bearish markets

08:18, August 12, 2010      

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Chicago wheat futures steadied on Wednesday, and the prices were caught between the surging dollar and the supply concerns, as traders awaited the USDA's new crop production report due out on Thursday.

Corn inched up, supported by strong export prospects of U.S. corn and the hot weather in U.S. Midwest, which is adding to the uncertainty about the USDA's crop estimates. Soybean ended moderately lower.

December corn rose 2.0 cents, or 0.5 percent, to 4.11 dollars per bushel. November soybean lost 6.5 cents, or 0.6 percent, to 10. 155 dollars per bushel.

U.S. equity markets plunged on Wednesday after the Federal Reserve highlighted the weakness in U.S. economic recovery on Tuesday and noted that it is likely to be more modest in the near term than expected.

The speculation that global economic recovery is slowing down has sparked heavy selling in grain futures markets on Wednesday, as investors fled riskier assets, including commodities and stocks, to safe-haven assets like the dollar and gold. The strong rally in the dollar and the decline in crude oil price on Wednesday both weighed on grain futures.

The agricultural minister of Ukraine said on Wednesday that Ukraine, the world's biggest barley exporter, is considering introducing export quotas on wheat and other export crops, in order to curb surging domestic prices after the adverse weather had devastated its crop yields. The news has rekindled investors' concern over global wheat supply shortage and added upward pressure on wheat price.

Traders noted that a flurry of corn export sales announced by the USDA on Wednesday, including 180,000 tonnes to Egypt, 103,632 tonnes to Japan, 480,000 tonnes to Mexico and 174,000 tonnes to an unknown destination, helped to push up corn price.

Meanwhile, the USDA announced on Wednesday a sale of 115,000 tonnes of soybeans to China, which gave some support to soybean price. But it failed to offset the negative influence of the bearish markets as well as expectations of bumper crops in the United States.



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