Grains tumble

US grains tumbled on Wednesday, and soyabeans sank below $16 a bushel to their lowest price in nearly three months as worries about Europe's debt crisis had investors scrambling for safe-haven assets like US Treasury bonds. The declines were accentuated as hedge funds booked profits ahead of the end of the month and quarter. Corn was on track for a second straight monthly decline, and soyabeans headed for their first drop in four months.
Corn futures fell 2.5 percent to the lowest level in nearly three months. Like soyabeans, corn was pressured by the harvest in the world's top grains exporter moving at a record clip, boosting supplies in the pipeline. Chicago Board of Trade November soyabeans fell 38-1/2 cents, or 2.4 percent, to close at $15.73 a bushel. CBOT December corn was down 19 cents, or 2.6 percent, at $7.24-3/4 a bushel while December wheat fell 17-1/4 cents, or 2.0 percent, to $8.69-1/4. Investors had focused for more than three months on tight supplies brought on by the worst US drought in half a century, but now they are turning their attention to macro-economic factors, including a stronger dollar, for price direction.
Analysts said investors were liquidating long positions in grains after prices hit record highs this summer. They said prices have been pressured by anecdotal accounts of better-than-expected soyabean yields and dimming demand for corn. "New-crop supplies are coming into the market and there was some balancing of books before end of the month and quarter," said Sterling Smith, futures specialist at Citigroup in Chicago.
Corn futures were also weighed by US crude oil falling 1.5 percent and ethanol production in the United States slumping 3 percent last week to a two-month low. China's corn imports are expected to drop just over 60 percent next year, according to a Reuters poll. But the biggest market mover of the day was the debt crisis in Europe, which helped to strengthen the dollar and shift the attention away from fundamentals.
"Grains took the diverging path due to supply-side fundamentals in the third quarter, but the two roads are coming together now." said Mike Zuzolo, president of Global Commodity Analytics in Lafayette, Indiana. Investors worried about Europe's debt crisis as tens of thousands in Greece took to the streets in the country's biggest anti-austerity demonstration in months even as the European Central Bank began buying bonds to restore economic confidence.