Chicago grain prices tumbled on Friday as China moved to rein in inflation, and as a result, it slows the economy and curbs demands for food. The wheat futures fell for the first time in three days, while soybeans and corn also slipped.
The most active corn contract for December delivery fell 21 cents, or 3.9 percent, to 5.2075 U.S. dollars per bushel. December wheat declined 0.75 cents, or 0.12 percent, to 6.445 dollars per bushel. January soybean shed 40.5 cents, or 3.3 percent, to 12.015 dollars per bushel.
Market traders noted that concerns that China's tightening measures would dampen demands for imported agricultural products has encouraged selling and investors wanted to cash in their holding before the weekend.
China's central bank on Friday ordered banks to set aside an additional 0.5 percent of their deposits from Nov. 29, the fifth such hike this year and the second increase this month. The country's consumer price index (CPI), a main gauge of inflation, soared to a 25-month high of 4.4 percent year on year in October.
Some traders expected China would further raise its benchmark interest rate given no apparent ease in inflation level.
China is the biggest consumer of soybeans and wheat, and the second largest user of corn. Corn and soybeans surged earlier this month to the highest prices in two years as growth accelerated in China.
Moreover, the grain prices also fell as rain improved prospects for crops in South America, where soil moisture had been depleted by dry weather earlier this year, said a market trader.
Parts of Brazil got as much as three 7.6 centimeters of rain in the past 24 hours and most of the growing region would have showers during the next two weeks. Besides, some fields in Argentina got as much as 0.8 inch of rain in the past 24 hours with more expected in the next week, World Weather Inc. Friday said in a report.
