Investing.com - U.S. grain futures came under pressure during European morning trade on Wednesday, as investors continued to cut their exposure to riskier assets amid growing concerns over political turmoil in Greece.
Agricultural commodities were affected by broader market risk aversion, as concerns over Greece’s future in the single currency bloc mounted on Tuesday after Alexis Tsipras, the head of Greece’s second-biggest party Syriza, declared that Greece's financial aid package is null and void, and called for a moratorium on Greek debt payments.
The political uncertainty fuelled fears that Greece will not have a government in place in time to secure its next tranche of international aid next month, as new elections look increasingly likely, fanning fears over a potential default and exit from the euro zone.
Investors were also fearful that French president-elect Francois Hollande’s focus on growth rather than austerity measures as a means to tackle the euro zone’s debt crisis could spark tensions with Germany.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.25% to trade at 80.13, the highest since April 16.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Meanwhile, grain traders readjusted positions ahead of the release of a key monthly U.S. government report on U.S. and global grain supplies on Thursday.
On the Chicago Mercantile Exchange, corn futures for July delivery traded at USD6.2038 a bushel during European morning trade, shedding 0.35%. It earlier fell by as much as 0.4% to trade at a session low of USD6.2013 a bushel.
Analysts expect the USDA to cut its estimate on U.S. corn stocks, which are already at a 16-year low. Global supplies of the grain, however were seen rising to a three-year high.
The U.S. produced 38% of the world's corn last year, making it the both world's largest corn producing nation and the largest exporter of the grain, while China is the world’s largest consumer of the grain.
Meanwhile, wheat for July delivery traded at USD6.1188 a bushel, slumping 0.4%. It earlier fell by as much as 0.45% to trade at a daily low of USD6.1125 a bushel. Prices touched USD5.9963 on Friday, the lowest since January 19.
The market expects U.S. farmers to harvest their largest winter wheat crop since the 2008-09 season, after near-perfect growing conditions in key wheat-growing states in the U.S. Great Plains region boosted crops.
Wheat prices have lost almost 10% since March 30 after the USDA pegged global wheat supplies in the current marketing season at 206.27 million tons, the highest in 11 years in its April Supply and Demand report.
Elsewhere on the Chicago Board of Trade, soybeans futures for July delivery traded at USD14.2963 a bushel during European morning trade, dipping 0.6%. It earlier fell by as much as 0.75% to trade at a session low of USD14.2825 a bushel.
Soybean prices have been under pressure since touching a four-year high of USD15.1237 a bushel on May 2, as investors liquidated long positions to lock in gains from an impressive rally.
Commodity funds sold an estimated net 8,000 soybean contracts on Tuesday, trade sources said.
Soybean prices have rallied nearly 19% since the beginning of February, and rose almost 6.5% in April, as market sentiment has been dominated by concerns over distressed crops in major South American soy growers and amid indications demand for U.S. soy from top consumer China remains strong.
The USDA report is expected to show a decline in soybean stocks at the end of the 2011-12 marketing season, adding further pressure to near-term soybean supplies.
Societe Generale raised its forecasts for benchmark soybean prices in a report last week, and warned global stockpiles were nearing "critical levels."
The French bank now expects soybean futures in Chicago to average USD14.00 a bushel in 2012, up from the previous estimate of USD12.50.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.
Agricultural commodities were affected by broader market risk aversion, as concerns over Greece’s future in the single currency bloc mounted on Tuesday after Alexis Tsipras, the head of Greece’s second-biggest party Syriza, declared that Greece's financial aid package is null and void, and called for a moratorium on Greek debt payments.
The political uncertainty fuelled fears that Greece will not have a government in place in time to secure its next tranche of international aid next month, as new elections look increasingly likely, fanning fears over a potential default and exit from the euro zone.
Investors were also fearful that French president-elect Francois Hollande’s focus on growth rather than austerity measures as a means to tackle the euro zone’s debt crisis could spark tensions with Germany.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.25% to trade at 80.13, the highest since April 16.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
Meanwhile, grain traders readjusted positions ahead of the release of a key monthly U.S. government report on U.S. and global grain supplies on Thursday.
On the Chicago Mercantile Exchange, corn futures for July delivery traded at USD6.2038 a bushel during European morning trade, shedding 0.35%. It earlier fell by as much as 0.4% to trade at a session low of USD6.2013 a bushel.
Analysts expect the USDA to cut its estimate on U.S. corn stocks, which are already at a 16-year low. Global supplies of the grain, however were seen rising to a three-year high.
The U.S. produced 38% of the world's corn last year, making it the both world's largest corn producing nation and the largest exporter of the grain, while China is the world’s largest consumer of the grain.
Meanwhile, wheat for July delivery traded at USD6.1188 a bushel, slumping 0.4%. It earlier fell by as much as 0.45% to trade at a daily low of USD6.1125 a bushel. Prices touched USD5.9963 on Friday, the lowest since January 19.
The market expects U.S. farmers to harvest their largest winter wheat crop since the 2008-09 season, after near-perfect growing conditions in key wheat-growing states in the U.S. Great Plains region boosted crops.
Wheat prices have lost almost 10% since March 30 after the USDA pegged global wheat supplies in the current marketing season at 206.27 million tons, the highest in 11 years in its April Supply and Demand report.
Elsewhere on the Chicago Board of Trade, soybeans futures for July delivery traded at USD14.2963 a bushel during European morning trade, dipping 0.6%. It earlier fell by as much as 0.75% to trade at a session low of USD14.2825 a bushel.
Soybean prices have been under pressure since touching a four-year high of USD15.1237 a bushel on May 2, as investors liquidated long positions to lock in gains from an impressive rally.
Commodity funds sold an estimated net 8,000 soybean contracts on Tuesday, trade sources said.
Soybean prices have rallied nearly 19% since the beginning of February, and rose almost 6.5% in April, as market sentiment has been dominated by concerns over distressed crops in major South American soy growers and amid indications demand for U.S. soy from top consumer China remains strong.
The USDA report is expected to show a decline in soybean stocks at the end of the 2011-12 marketing season, adding further pressure to near-term soybean supplies.
Societe Generale raised its forecasts for benchmark soybean prices in a report last week, and warned global stockpiles were nearing "critical levels."
The French bank now expects soybean futures in Chicago to average USD14.00 a bushel in 2012, up from the previous estimate of USD12.50.
Corn is the biggest U.S. crop, valued at USD66.7 billion in 2010, followed by soybeans at USD38.9 billion, government figures show. Wheat was fourth at USD13 billion, behind hay.