* Wheat drops 2.4 pct, soybeans down 2 pct on firm dollar
* Corn drops for seventh straight day on production view
* China's lending restrictions add pressure
(Updates with U.S. trading, analysts; changes dateline from
SYDNEY/PARIS)
By Mark Weinraub
CHICAGO, Jan 20 (Reuters) - A rallying U.S. dollar on
Wednesday, pushed soybean and wheat futures, which already were
struggling with a bearish fundamental picture, to their lowest
levels in more than three months, traders said.
Corn futures fell on a combination of the strength in the
dollar and continued pressure from the U.S. Agriculture
Department's bigger-than-expected production forecast.
"The dollar is going up and that is pressuring grains,
crude oil and gold," said Vic Lespinasse, an analyst for
GrainAnalyst.com in Chicago.
Wheat led the way lower, dropping 2.4 percent to its lowest
level since Oct. 12.
The strong dollar dampens investor enthusiasm for picking
up commodities as a hedge against inflation and makes prices
for U.S. wheat relatively more expensive to overseas buyers.
Falling prices for wheat have sparked some buying in recent
days, but U.S. wheat was attracting little interest.
At 11:11 a.m. CST (1711 GMT), Chicago Board of Trade March
wheat futures were down 12 cents at $4.88-1/2 a bushel.
Soybean prices, which were down 2 percent and trading at
their lowest level since Oct. 9, were facing additional
pressure because Chinese authorities ordered some big banks to
curb their lending for the rest of January.
"China is tightening up, urging their banks not to make
loans through the end of the month or longer," Lespinasse said.
"So, with China putting the brakes on the perceived overheated
economy, that's bearish for commodities, especially beans."
CBOT March soybean futures dropped 19-1/2 cents to $9.44 a
bushel.
Excellent soybean crop weather in South America and the
huge acreage planted to soy there has led to numerous forecasts
for a bumper crop and that contributed to the falling prices.
"From my point of view, the soybean market is moving from a
demand-driven bull phase into a supply-driven bear phase as
we've had record U.S. production and a big and growing South
American crop," said Toby Hassall, an analyst with Commodity
Warrants Australia.
There also was a view that China, the world's top purchaser
of soy, had covered its needs for the time being and might not
be as active a buyer as in the past, Hassall added.
Corn futures dropped for the seventh day in a row after
being hammered by last week's bearish USDA crop report.
"You would explain some of the move today with action in
the dollar, but the market is also being affected by last
week's USDA reports that came as a surprise to a large number
of people," Hassall said.
CBOT corn for March delivery was down 6 cents at $3.63-1/4
a bushel. Prices fell to their lowest level since Nov. 2
earlier in the day.
The dollar hit a five-month high against the euro and a
one-month high against a basket of currencies on Wednesday on
the view that the Republican gain of a U.S. Senate seat may
help to reduce the nation's fiscal deficit.
Prices at 11:13 a.m. CST (1713 GMT)
Pct 2009 YTD
Last Change Chg Close Pct Chg
---------------------------------------------------------------
CBOT corn Cc1> 3.6350 -0.0575 -1.6 4.145 -12.3
CBOT soy Sc1> 9.4425 -0.1925 -2.0 10.3975 -9.2
CBOT meal SMc1> 286.00 -4.90 -1.7 313.9 -8.9
CBOT soyoil BOc1> 0.3652 -0.0063 -1.7 0.4035 -9.5
CBOT wheat Wc1> 4.8850 -0.1200 -2.4 5.415 -9.8
CBOT rice RRc1> 13.5550 -0.3650 -2.6 14.565 -6.9
EU wheat BL2H0> 125.50 -0.25 -0.2 131 -4.2
US crude CLc1> 77.12 -1.9 -2.4 79.36 -2.8
Dow Jones .DJI> 10548 -177 -1.7 10428 1.2
Gold XAU=> 1110.35 -27.60 -2.4 1096.35 1.3
Euro/dollar EUR=> 1.409 -0.0201 -1.4 1.4316 -1.6
Dollar Index .DXY> 78.4130 0.9130 1.2 77.8600 0.7
Baltic Freight .BADI> 3158 -50 -1.6 3005 5.1
*In U.S. dollars, front-month contracts, except EU wheat, which
is in euros, CBOT wheat, corn and soybeans per bushel, rice per
hundredweight, soymeal per ton and soyoil per lb.
(Additional reporting by Bruce Hextall in Sydney and Marie
Maitre in Paris; Editing by Walter Bagley)
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