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Economic jitters send grains tumbling

08/04/2011 @ 3:33pm

CHICAGO (Dow Jones)--U.S. grain and soybean futures tumbled Thursday as widespread economic jitters rattled commodity and equity markets.

Soft red winter wheat for September delivery sank 28 3/4 cents, or 4%, to $6.81 3/4 a bushel at the Chicago Board of Trade. Corn for December delivery fell 11 1/2 cents, or 1.6%, to $7.01 1/2. Soybeans for November delivery lost 27 3/4 cents, or 2%, to $13.45 1/4 a bushel.

Driving prices lower was broad selling of equities and commodities, including grains, crude oil and precious metals. Traders fled from riskier assets as the U.S. dollar climbed and fears increased about slowing economic growth.

"It's sort of a national down day," said Sid Love of Kropf & Love Consulting, an agricultural advisory firm.

The firm dollar weighed on grain prices because it makes U.S. commodities more expensive to foreign buyers. Traders were already worried about declining export demand due to increased competition for business from Russia, which lifted a nearly year-long ban on grain exports last month.

Russia has consistently been undercutting U.S. wheat on the world market since the ban expired as its grain production has rebounded following a severe drought last summer. Egypt, typically the world's top wheat buyer, on Thursday bought Russian and Romanian wheat in a tender and none from the U.S.

Still, corn avoided sliding as much as wheat as bargain hunters entered the market as buyers during the selloff. Grain users are buying on setbacks in prices because they are nervous about the potential for poor weather to more reduce output.

Private analytical firm Informa Economics on Thursday became the latest crop forecaster to cut its outlook for the U.S. corn harvest due to intense July heat. The firm lowered its estimate for the harvest to 13.353 billion bushels from its July estimate of 13.759 billion bushels. It was still above other estimates released this week by other private firms.

Other markets

December soymeal ended down 1.6% at $355.70 per short ton, while December soyoil dropped 2.1% to 55.87 cents a pound. September rice slipped 0.6% to $16.25 per hundredweight. December ethanol slid 2.3% to $2.516 per gallon, and September oats for September sank 4.1% to $3.31 1/2 a bushel.

At the Kansas City Board of Trade, hard red winter wheat for September delivery lost 3.4% to $7.71 a bushel. Hard red spring wheat for September delivery slid 2.5% to $8.23 1/4 a bushel at MGEX in Minneapolis.

-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com
(END) Dow Jones Newswires
August 04, 2011 15:49 ET (19:49 GMT)

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