Sept. 21 (Bloomberg) -- Wheat futures fell to a two-month low on concern that the global economy will falter, diminishing demand for commodities.
After Chicago grain markets closed, the U.S. Federal Reserve said there are “significant downside risks” to the economic outlook. The Standard & Poor’s 500 Index dropped as much as 3 percent, and the Thomson Reuters/Jefferies CRB Index of raw materials slid 1.1 percent.
“The economy, not only in the U.S., but the global economy continues to struggle,” Jerod Leman, a broker at Wellington Commodities in Carmel, Indiana, said in a telephone interview. “There is concern that we’ll slip back into recession, and that would slow down demand for commodities.”
Wheat futures for December delivery dropped 8 cents, or 1.2 percent, to settle at $6.6675 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price touched $6.66, the lowest for a most-active contract since July 13. The grain tumbled in the final 15 minutes of trading, just before the Fed announcement, after rising as much as 1.2 percent.
Wheat has tumbled 16 percent this month amid mounting U.S. economic concerns and European debt woes. Increasing competition for U.S. grain exports also pushed prices lower, as countries including Russia and Canada boost output following adverse weather last year.
“There are growing world wheat stocks, and so wheat basically has just been supported by the corn market,” Jim Hemminger, a risk-management specialist at Top Third Ag Marketing in Chicago, said in a phone interview.
Corn futures have climbed 9 percent this year, while wheat has dropped 16 percent. The grains are ingredients in livestock feed.
Wheat is the fourth-largest U.S. crop, valued at $13 billion in 2010, behind corn, soybeans and hay, government data show.
--Editors: Patrick McKiernan, Millie Munshi
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