Forexpros – U.S. grain futures came under pressure during European morning trade on Monday, as investors cut their exposure to riskier assets amid concerns over the impact of weekend elections in France and Greece on the euro zone’s ongoing debt crisis.
Agricultural commodities were affected by broader market risk aversion after Socialist challenger Francois Hollande defeated French President Nicolas Sarkozy and pro-bailout Greek political parties took a drubbing according to exit polls in from Sunday’s parliamentary elections.
The weekend election results triggered fresh uncertainty over Europe’s ability to tackle its debt crisis.
Hollande has recently called for a re-negotiation of Europe’s fiscal pact and its tough budget rules, while no political party won enough votes to form a government in Greece, prompting speculation the debt-strapped country could reject its newly signed aid package.
Adding to the gloomy trade environment was a much weaker-than-expected U.S. jobs report on Friday, which added to uncertainty over the strength of the U.S. economic recovery.
The Department of Labor said the U.S. economy added 115,000 jobs in April, the smallest increase in six months and far short of expectations for a 170,000 increase, after adding an upwardly revised 154,000 jobs in March.
The unemployment rate ticked lower to 8.1%, the lowest since January 2009. However, the data showed that the decline stemmed entirely from people dropping out of the labor force.
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 0.3% to trade at 79.83.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
On the Chicago Mercantile Exchange, corn futures for July delivery traded at USD6.1475 a bushel during European morning trade, shedding 0.78%. It earlier fell by as much as 0.85% to trade at a session low of USD6.1463 a bushel.
Corn futures remained supported after the U.S. Department of Agriculture said Friday that U.S. corn export sales totaled 3.472 million tonnes last week, the highest in 21 years.
The export sales total included 214,000 tonnes of old-crop to China and 172,500 tonnes of new-crop to China. Old-crop sales of 509,500 tonnes were made to an unknown destination and 1.92 million tonnes of new-crop to an unknown destination.
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 USD6.0500 a bushel, slumping 0.6%. It earlier fell by as much as 0.75% to trade at a daily low of USD6.0438 a bushel. Prices touched USD5.9963 on Friday, the lowest since January 19.
Wheat prices came under intense selling pressure last week after the Wheat Quality Council’s annual tour of Kansas projected the state’s wheat crop at 403.9 million bushels, the largest since 2003, adding to the view that global supplies are ample.
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 USD14.6825 a bushel during European morning trade, dipping 0.65%. It earlier fell by as much as 0.95% to trade at a session low of USD14.6313 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.
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.
Market participants were looking forward to the U.S. Department of Agriculture’s weekly planting progress report after Monday’s closing bell on the CBOT.
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.
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