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Grains slide on continued harvest pressure

09/26/2012 @ 3:26pm

U.S. corn and soybean futures fell Wednesday to three-month lows, buffeted by a seasonal increase in supplies and weakness in other commodity markets.

The corn and soy markets continued to be pressured by a boost in supplies as U.S. farmers harvest crops. Futures also were weighed down again by managed funds exiting bullish bets to reduce their risk exposure in markets that lept to record highs in the past two months.

Heavy selling was seen across assets from crude oil to metal futures while the U.S. dollar strengthened against other currencies. Many commodities declined Wednesday on renewed worries about the euro-zone debt crisis.

"There was not a lot of reason to own risky assets today," said Tregg Cronin, analyst with brokerage Country Hedging in St. Paul, Minn.

Grain and soy markets returned to a trading environment seen prior to the drought this summer, as macroeconomic factors led to bearish sentiment, said Mike Zuzolo, president of advisory firm Global Commodity Analytics and Consulting in Lafayette, Ind.

Technically based selling accelerated the declines in corn, soybeans and wheat futures, as prices slipped below key price levels on technical charts. "The technical weakness produced high-end speculative fund liquidation at its finest," Mr. Cronin said.

Anecdotal reports of better-than expected soybean yields from early harvests added to the losses in beans, with traders acknowledging the near-term supply pipeline is amply stocked.

Traders were also reducing market positions ahead of Friday's U.S. Department of Agriculture supply reports, and funds were trying to secure profits before the end of the month and quarter.

Soybeans have declined in six of the past eight trading days, and were down nearly 13% from their record intraday high of $17.94 3/4 reached Sept. 4.

Soybeans for November delivery dropped 38 1/2 cents, or 2.4%, to $15.73 a bushel at the Chicago Board of Trade.

Corn for December delivery fell 19 cents, or 2.6%, to $7.24 3/4 a bushel.

Wheat futures fell in unison with corn and soybeans, drawing added pressure from a firmer U.S. dollar and concerns about lagging export demand. A stronger dollar makes U.S. wheat exports more expensive to global importers at a time when U.S. exports continue to suffer from increased competition from wheat grown in France and Europe's Black Sea region.

Wheat for December delivery dropped 17 1/4 cents, or 1.9%, to $8.69 1/4 a bushel at the Chicago Board of Trade.

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