Wheat at 12-week low

US wheat fell to a 12-week low and corn lost ground for a third straight session after a warning from the US Federal Reserve of significant risks to the economy prompted a sell-off on financial markets.

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US wheat fell to a 12-week low on Thursday and corn lost ground for a third straight session after a warning from the US Federal Reserve of significant risks to the economy prompted a sell-off on financial markets.

Soybeans also sagged as US new-crop bean exports faced stiff competition from South American growers.

“Today's selloff is linked to the pessimistic macro-economic sentiment,” said Lynette Tan, an investment analyst at Phillip Futures in Singapore.

“We are seeing prices fall because the United States has warned of a significant downside risk to the economy.”

European shares meanwhile slumped to a 26-month low as the Fed's bleak outlook and data showing Chinese and German economies losing steam drove investors into safer currencies and government bonds.

Chicago Board of Trade December wheat fell 2.96 percent to $6.47 a bushel by 13:58 SA time, the lowest since early July on a continuation chart, while December corn lost 3.21 percent to $6.64 a bushel.

Benchmark European wheat fell in line with Chicago, although dealers looked for possible relief from a tender announced by Egypt, the world's biggest wheat buyer.

In Paris, November milling wheat was down 4.25 euros or 2.16 percent at 192.50 euros ($263.55)a tonne by 13:17 SA time. It fell earlier to 191.75 euros, a level last seen on Aug. 10.

CBOT November soybeans meanwhile fell 1.97 percent to $12.94-1/2 per bushel.

On Wednesday the Federal Reserve warned of significant risks to the already weak US economy and launched a new plan to lower long-term borrowing costs and bolster the battered housing market.

Despite the wariness of investors, analysts said the corn could draw support from forecasts for the tightest supplies in 16 years coupled with strong demand.

“We feel there is limited downside risk to corn as the market is quite oversold, while underpinning it is actually strong demand and bullish fundamentals,” said Tan. “I see support for December corn around $6.72-$6.75 a bushel.”

More bullish news came from China, which estimated its corn harvest this year would barely be enough to cover forecast consumption, implying the world's No. 2 economy could become a regular corn importer in the future.

Market talk this week suggested China was inquiring about buying up to 5 million tonnes of US corn, while China's plan to sell about 3.7 million tonnes of corn from its reserves by November was seen as a sign that it could shop for US grains.

But a company executive from a major state-owned trading house told Reuters China had not bought any corn from the United States in recent weeks. - Reuters

Source: http://www.iol.co.za/wheat-at-12-week-low-1.1143016

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