U.S. wheat, corn extend losing streak; soy rebounds

CHICAGO Thu Mar 10, 2011 3:56pm EST

CHICAGO (Reuters) - Corn and wheat prices fell on Thursday, pressured by a strong dollar, plunging equities markets and fears that a setback in the global economy will lower demand for agricultural commodities.

Soybean prices rose after three sessions of declines as an early drop below their 100-day moving average kindled buying by bargain hunters and end users.

"What we saw in the soybeans was heavy commercial buying step in after a sharply lower open and we didn't see as much of that in corn and in wheat," said Brian Hoops, president of Midwest Market Solutions, a brokerage and commodity marketing advisory service.

The U.S. Agriculture Department's monthly crop report released early Thursday lacked bullish news. It predicted bigger-than-expected wheat stocks and a growing soybean crop from Brazil, and failed to reverse this week's downward trend for corn and wheat prices.

Wheat futures at the Chicago Board of Trade dropped to their lowest level since early December shortly after the open, while corn, which settled down 2.6 percent, hit a two-week low.

"Everybody is wondering if the economy is going to be robust enough to support the demand that is supposedly going to continue," said Bob Utterback, of Utterback Marketing Services, a brokerage for farmers.

(Graphic on soy prices link.reuters.com/maz48r)

Ratings agency Moody's lowered its credit rating on Spain, renewing concerns over euro zone debt, and China reported a surprise trade deficit in February, which helped to rally the dollar. .DXY

"It does not help that our financial markets are kind of taking it on the chin here today," said Jerod Leman, a broker with Wellington Commodities Corp.

CBOT May wheat settled down 18-1/4 cents at $7.40-1/2 a bushel. Wheat, which has fallen about 11 percent this week, threatened its 200-day moving average early in the trading day. Wheat's four-session losing streak was its longest in more than two months.

May corn was down 18-1/4 cents at $6.82-3/4 a bushel, while May soybeans were up 6-1/2 cents at $13.55-1/2 a bushel.

"This looks to me like just another excellent opportunity for end users to get covered," said Jim Hemminger, senior risk manager with Top Third Ag Marketing.

USDA forecast U.S. wheat ending stocks at 843 million bushels, up 25 million from its previous view and 33 million above trader expectations. U.S. corn stocks, although unchanged from the earlier forecast, also came in above expectations.

"We needed something that would turn this (market) around," said Shawn McCambridge, an analyst with Prudential Bache Commodities. "To reverse that trend, I think we needed some friendly numbers here today."

USDA also left its U.S. soybean stocks outlook unchanged, but boosted its forecast of the Brazilian crop, which could take pressure off the tight global supply situation.

"The South America crop is growing and that's going to compensate for some of the tightness, so our world ending balance tables loosen up a little and the market loosens up a little," said Don Roose, an analyst with U.S. Commodities.

Moody's downgrade of Spain and the Chinese trade deficit heightened concerns about the world economy, which could crimp demand for agricultural commodities from buyers around the world.

The global economic woes added further strength to the U.S. dollar on Thursday. A strong dollar makes U.S. commodities more expensive for overseas buyers and lessens the demand for corn, soybeans and wheat from investors seeking a hedge against inflationary pressures.

(Editing by Walter Bagley, David Gregorio and Jim Marshall)

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