U.S. wheat drops 0.7 pct; euro zone worries weigh

Wheat falls 0.7 pct, after climbing nearly 4 pct

* Corn, soy drop as investors cautious on European debt

* Rain, snow to slow final U.S. corn harvesting

* Technicals: Soy to fall to $11.02-3/4

(Adds details, quotes)

By Naveen Thukral

SINGAPORE, Nov 30 (Reuters) – U.S. wheat slid on Wednesday amid a broad-based weakness in the commodity markets following a near 4 percent rally in the last session, its biggest one-day gain in more than a month. Corn fell 0.6 percent and soybeans lost 0.7 percent as investors remained cautious in the face of the euro zone debt crisis, which is hurting financial markets. “Corn and wheat markets are generally tracking the outside market as Europe’s debt crisis is still playing in the minds of investors,” said Lynette Tan, an analyst at Phillip Futures in Singapore. “But I think for both corn and wheat we could see some fresh demand as prices have fallen.”

Chicago Board of Trade corn for March delivery fell 0.6 percent to $6.01-1/4 per bushel by 0349 GMT, while March wheat lost 0.7 percent to $6.12 a bushel. January soybeans fell 0.7 percent to $11.17 per bushel. On Tuesday, U.S. wheat prices jumped almost 4 percent and corn 1 percent as a weaker dollar coupled with strength in crude oil and U.S. equity markets sparked a short-covering rally.

Asian shares fell and the euro trimmed gains as caution set in over the chance for more progress in resolving euro zone debt woes after officials agreed to strengthen a rescue fund and seek more aid from the International Monetary Fund. A meeting among euro zone ministers pointed to the possibility of seeking the IMF’s help to boost the region’s rescue fund after Italy’s borrowing costs hit a euro lifetime high of nearly 8 percent, suggesting far more needs to be done to resolve the European sovereign debt crisis.

On the fundamental front, wheat market could face additional pressure from improved weather forecast for the winter crop in the United States.

Rainfall in the Plains hard red winter wheat belt over the weekend and more precipitation later this week will further boost prospects for the 2012 winter wheat harvest.

Argentina’s government approved an additional 2.7 million tonnes of 2010/11 wheat for export, boosting the total to 11.1 million tonnes, Agriculture Minister Julian Dominguez told reporters.

For corn, more rain and snow is expected to slow final U.S. harvesting this week, an agricultural meteorologist said. The corn and soybean harvests were virtually complete in the Midwest, with some remaining corn to be harvested in the eastern Midwest where excessive wet weather had been slowing harvest. Soybean export premiums at the U.S. Gulf Coast firmed on Tuesday, supported by slow farmer selling and demand from China, traders said.

Chinese importers may have bought two cargoes of U.S. soybeans for January shipment from the U.S. Gulf on Tuesday and a small amount of new-crop Brazilian soybeans. U.S. grain traders largely expect no corn and wheat deliveries against the Chicago Board of Trade December contracts on Wednesday, the first notice day for deliveries, due to strong prices in the cash markets.

Prices at 0349 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI

CBOT wheat 612.00 -4.00 -0.65% +3.20% 631.14 46

CBOT soy 1117.00 -8.00 -0.71% -0.36% 1188.56 32

CBOT rice $14.37 $0.00 +0.00% +1.59% $15.72 36

WTI crude $99.10 -$0.69 -0.69% +0.91% $95.66 59

Currencies

Euro/dlr $1.332 $0.000 -0.02% +0.60%

USD/AUD 1.001 0.020 +2.02% +3.18%

Most active contracts

Wheat and soy US cents/bushel. Rice: USD per hundredweight

RSI 14, exponential

(Editing by Himani Sarkar)