An alliance of fears for China's economy, weak US export data and upgrades to Informa Economics estimates for Argentine crops sent farm commodity prices lower on Thursday, with wheat leading the retreat.

Fears for China's economic recovery, believed to have been triggered by a forecast from Industrial Bank of a 50% slide in new lending this year, got live trading in Chicago off to a poor start. They had already seen Shanghai shares close 2.4% lower.

Commodity markets are particularly prone to rumours of economic hiccups in China, the world's biggest buyer of soybeans and many other raw materials.

Poor US export sales data hardly helped, with those for soybeans falling to their lowest of 2009-10.

"Weekly export sales reinforce the bearish sentiment that seems to have settled over the broad commodity markets, with data at or below low-side estimates," broker Benson Quinn Commodities said.

'Bearish estimates'

And losses deepened after Informa added a whopping 2.8m tonnes to its forecast for Argentina's corn crop, taking it to 21m tonnes, with the soybean crop estimate raised by 1m tonnes to 55m tonnes.

"These are bearish estimates and they are adding additional weight to the market," Vic Lespinasse, the GrainAnalyst.com analyst, said.

If investors needed an extra incentive to sell, the dollar strengthened, notably against the euro, which shed 1% after Jean-Claude Trichet, the head of the European Central Bank, restated predictions of an uneven and fragile economic recovery in the eurozone.

A strong dollar makes prices of US exports, such as crops and many other commodities, less affordable to buyers using other currencies.

Oil, indeed, slipped 0.6% as of 18:15 GMT.

'Very poor'

Still, that was not a patch on wheat, which tumbled 2.6% to $4.90 ¼ a bushel for March delivery, and by the same to $5.02 ½ a bushel for March.

Its weekly export sales came in at 102,000 tonnes, a figure Darrell Holaday at broker Country Futures described as "very poor".

India is threatening to resume exports too, an initiative which would add to the pressure on already-heavy wheat markets.

Indeed, with the dollar on their side, investors appeared to have returned to work raising short positions without much fear of being caught out by a wave of position-covering, as boosted the grain in the last session.

Soybean exports slide 

Chicago soybeans slipped 2.2% to $9.33 ½ a bushel for March and 2.0% to $9.44 a bushel for May, with US export sales data showing China, which went bought the oilseed hand over fist earlier in the season, not buying any for 2009-10 over the week.

"But they did not cancel any sales either," Benson Quinn said, a nod to longstanding expectations that China will shift its purchases from the US to South America.

Meanwhile, corn lost 1.1% to $3.71 ½ a bushel for March and 1.0% top $3.82 ¾ a bushel for May, with the impact of the Informa revisions offset somewhat by hopes that America's Environmental Protection Agency may as early as May decide on whether to increase a ceiling on the amount of ethanol blended into petrol. The limit is currently 10%.

"Traders think they will increase the blend rate to roughly 12-13%, which will increase the demand for corn to produce ethanol and would be friendly for corn prices," Mr Lespinasse said.

'Bearish scenario' 

European wheats were lower too, with a recovering pound dealing a blow to London wheat for March, which closed down £1.40 a tonne at £94.65 a tonne.

"[With] reports of European Union farmer selling picking up, ample supplies still needing to be placed onto the markets, and new crop prospects remaining favourable, the fundamentals still paint a bearish market scenario," Gleadell, the UK grain merchant, said.

Paris wheat for March ended down E0.75 at E119.50 a tonne, its lowest since September.

Sugar slides again 

Sugar couldn't even match this performance, slumping 4.4% in London to $592.00 a tonne, its lowest close in nearly four months.

The sweetener was weighed down by the prospect of Brazil's harvest, the world's biggest, coming on line to ease the world supply squeeze.

New York raw sugar for May stood 2.1% lower at 21.59 cents a pound in late deals, not far from the 21-cent "Waterloo" point identified by Sucden Financial on Wednesday.

Cocoa, however, enjoyed a better day, amid reports that the Ivory Coast season may have ended early, with deliveries from plantations to ports slowing to a trickle.

May cocoa added 0.8% to £2,142 a tonne in London.