U.S. corn and wheat slip on big supplies, economy woes

By Bruce Hextall and Valerie Parent

PARIS/SYDNEY (Reuters) - U.S. corn and wheat futures eased lower on Friday, extending heavy losses in the previous U.S. session, as grains remained under pressure from hefty global supplies and demand concerns in a deteriorating economy.

"Fundamentally, there's not a lot to support these markets right now," said Brett Cooper, a trader at MF Global Australia Ltd.

Friday's losses added to Thursday's sharp falls, when U.S. corn and soybean futures fell 4 percent and wheat dropped 3 percent.

U.S. December delivery corn fell 3-3/4 cents or 1.03 percent to $3.60 a bushel by 6:37 a.m. EST, December wheat lost 5 cents or 0.98 percent to $5.06-3/4.

Soybeans for January delivery inched down 1-3/4 cents or 0.20 percent to $8.54-1/4 per bushel.

Soybeans had been slightly firmer earlier as they found support in steady crude oil, which regained the $50 threshold surrendered in Thursday's slide, and in dry weather in Argentina, the world's third largest soybean exporter.

Corn was the feeling squeeze in particular as traders took the view that the world was well supplied with feed grains and demand for ethanol production would be cut back.

"When you look at the feed grain complex in general it is under a fair bit of pressure, and with ethanol you are seeing the problems some of these companies in the U.S. are having like VeraSun," Cooper said.

U.S. biofuels giant VeraSun (VSUNQ.PK) went to bankruptcy last month, leading to concerns about the health of the U.S. ethanol industry and its demand for corn.

"Ethanol demand is questionable and with crude coming off, ethanol prices have been coming off accordingly," said Tim Glass, head of global commodities at National Australia Bank Ltd.

Front-month corn has retreated from a record high in June of $7.65 and is now back to the level it was trading at the start of last year.

Wheat, meanwhile, has tumbled more than 60 percent from an all-time peak in February of $13.34-1/2 a bushel.

Cooper said Black Sea wheat was being offered "at aggressive prices" as suppliers sought to reduce the cost of holding inventories.

Egypt purchased 30,000 tonnes of Russian wheat on Thursday, illustrating the price competitiveness of Black Sea grain.

In morning Euronext trade, European milling wheat futures eased lower in line with U.S. grains.