EU, U.S. grains at multi-month lows on slow demand

PARIS/SINGAPORE (Reuters) - U.S. soybean futures fell 3.5 percent on Tuesday to their lowest level in three months on good crop weather and declining Chinese demand, dragging down other grains including European wheat that hit an 8-month low.

"Soybeans and corn will continue the downward trend," said Kazuhiko Saito, strategist at Interes Capital Management Co. in Tokyo.

"We are looking at the September corn contract below $5 and November soybeans below $12 in the next one or two weeks."

Front-month August soybean on the Chicago Board of Trade was down 3.42 percent at $12.43 per bushel at 6 a.m. EDT.

January soybeans on China's Dalian exchange was down by its daily limit of 5 percent.

"Large imports (into China) recently have dampened the market sentiment," said analyst Fang Junfeng at China International Futures in Shanghai, adding, however, that the pace of imported cargoes had now gone down.

China has bought about 400,000 tonnes of soyoil and up to 1 million tonnes of soybeans for its reserves, in an effort to further dampen domestic prices and keep inflation in check, traders said last week.

CBOT September delivery corn fell 3.13 percent, or 16-1/4 cents, to $5.19-1/4 per bushel, the lowest level for the front month in nearly five months.

U.S. corn and soybean crops are in better condition than a year ago due to greenhouse-like conditions throughout the Midwest, the Agriculture Department said in a weekly report on Monday. Corn prices also fell 5 percent to a four-month low as the U.S. crop reproduces or pollinates amid nearly ideal weather.

The fall in soybeans and corn futures pulled wheat in their wake, as well as European grains and oilseed futures.

CBOT September delivery wheat was down 1.42 percent, or 10-3/4 cents, at $7.48 per bushel. Wheat fell 4 percent on Monday to a two-month low on plentiful supplies and spill over selling from collapsing soy and corn.

The Paris-based benchmark November contract on Euronext milling wheat futures was down 4.25 euros or more than 2 percent at 181.25 euros a tonne, its lowest level since the end of November.

"We are just following the U.S.," a European trader said, stressing that most other commodities markets were also lower.

Evidence of a global economic slowdown prompted investors to dump oil and other commodities on Tuesday.

Benchmark oil prices fell to a three-month low at $118 a barrel, extending a slide since the July 11 record high of $147.27. By 1000 it was back at around $119.45 a barrel.

Euronext rapeseed futures also hit an 8-month low, with November losing 19 euros a tonne or 5 percent at 372 euros a tonne.

Ukraine raised its grain export forecast for 2008-2009 to 17.5 million tonnes from 15 million tonnes previously. Cheaper Black Sea grains have been a factor weighing on prices of EU grains over the last weeks.

Favorable weather also boosted Bulgaria's 2008 wheat crop to a 16-year high, opening the way for hefty exports, Agriculture Minister Valeri Tsvetanov said.

(Writing by Sybille de La Hamaide, Editing by Michael Roddy)