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Chicago grains consolidate as Black Sea, recession risks assessed

By Gus Trompiz and Enrico Dela Cruz

PARIS/MANILA, Sept 22 (Reuters) - Chicago wheat eased on Thursday after a two-month peak while corn and soybeans were steady as grain markets weighed the risk of a deepening conflict in Ukraine and the threat of interest rate hikes triggering an economic downturn. The most-traded wheat contract on the Chicago Board of Trade (CBOT) was down 0.6% at $8.98 a bushel by 1115 GMT, after edging higher earlier in the session.

On Wednesday, the contract had risen to its highest since July 11 after President Vladimir Putin ordered a Russian mobilisation to fight in Ukraine and hinted he was prepared to use nuclear weapons. Moscow's declarations, which also included support for referendums on joining Russia in occupied zones of Ukraine, fanned fears of more disruption to Black Sea grain trade that has been partially re-established by a shipping corridor from Ukraine.

However, a new 20-year high for the dollar index and losses in equity markets, after the U.S. Federal Reserve said it would keep battling inflation beyond a latest rate rise, curbed the rally in wheat.

"It's like with Putin the market's up and with the Fed it's down," a European trader said.

The U.S. central bank hiked rates by 75 basis points for a third consecutive time, as expected, and raised its rate target to its highest since 2008.

"The Fed is effectively acknowledging that a recession is coming, but inflation will not fall quickly and there will be a lot of pain," ING economists said in a note.

However, commodity markets drew some support from signs of increasing fuel demand in China. CBOT corn was unchanged on the day at $6.85-1/2 a bushel, while CBOT soybeans added 0.2% to $14.63-3/4 a bushel. Corn and soy markets had fallen on Wednesday, pressured by economic worries and the dollar's strength. Chicago soybeans have been also been capped by a surge in Argentine exports following government incentives. The market will get an update on U.S. grain export sales in weekly data later on Thursday.

Prices at 1115 GMT Last Change Pct End Ytd Pct Move 2021 Move CBOT wheat 898.00 -5.75 -0.64 770.75 16.51 CBOT corn 685.50 0.00 0.00 593.25 15.55 CBOT soy 1463.75 2.50 0.17 1339.25 9.30 Paris wheat 345.75 -1.25 -0.36 276.75 24.93 Paris maize 338.25 0.25 0.07 226.00 49.67 Paris rape 586.75 6.75 1.16 754.00 -22.18 WTI crude oil 83.86 0.92 1.11 75.21 11.50 Euro/dlr 0.99 0.00 0.29 1.1368 -13.21 Most active contracts - Wheat, corn and soy US cents/bushel, Paris futures in euros per tonne.

(Reporting by Gus Trompiz in Paris and Enrico Dela Cruz in Manila; Editing by Sherry Jacob-Phillips and Krishna Chandra Eluri)

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