GRAINS-Wheat climbs as Ukraine war escalation feared; corn, soy lower
(Recasts; updates prices, adds quotes, changes byline, changes dateline from previous PARIS/MANILA)
By Julie Ingwersen
CHICAGO, Sept 21 (Reuters) - U.S. wheat futures hit their highest in more than two months on Wednesday on fears of an escalation in the Ukraine war that has disrupted crucial Black Sea grain exports, but pared gains as fears of a global recession pressured the wider commodities sector.
Corn and soybean futures turned lower and crude oil was choppy while the dollar jumped on expectations that the U.S. Federal Reserve will announce a big interest rate hike at 1 p.m. CDT (1800 GMT). A stronger dollar tends to make U.S. grains less competitive globally.
As of 12:52 p.m. CDT (1752 GMT), Chicago Board of Trade December wheat was up 12-1/4 cents at $9.06 per bushel after reaching $9.19-1/2, its highest since July 11.
CBOT December corn was down 5 cents at $6.87 a bushel and November soybeans were down 12-1/2 cents at $14.66-1/4 a bushel.
Grain and soy futures rose in early moves after President Vladimir Putin ordered a Russian mobilisation to fight in Ukraine and backed a plan to annex parts of the country, hinting he was prepared to use nuclear weapons.
"Geopolitical tensions are back in the Black Sea basin, with Putin's comments leading to fears of a new escalation in the conflict, resulting in risk premiums once again (being) added," consultancy Agritel said.
But commodity and equity markets churned as traders weighed how a recession might hurt demand for goods.
"Most of the ags are in negative territory on the recession trade, while wheat is again posting gains following its early-morning dip as traders worry about Ukraine risks," StoneX chief commodities economist Arlan Suderman wrote in a client note.
The U.S. central bank is expected to lift its policy rate by 75 basis points for the third time to a 3.00-3.25% range at the end of its two-day policy meeting, which will be followed by Fed Chair Jerome Powell's news conference.
Meanwhile, the start of the U.S. corn and soybean harvest added seasonal pressure in those markets. The U.S. Department of Agriculture this week said farmers had cut 7% of the U.S. corn crop and 3% of the soybean crop.
(Additional reporting by Gus Trompiz in Paris and Enrico Dela Cruz in Manila; Editing by Marguerita Choy)
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