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Market report

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The return of gloom about the global economy took the wind out of the sails of agricultural commodities, which had made strong early progress.

Prospects of a cold snap in the US Plains hard red winter wheat region, combined with further flooding in northern spring wheat areas and strong performance in other financial markets, supported prices for much of the day.

However, reminders of the scale of the global economic slowdown soured sentiment, with Morgan Stanley, the investment bank, advising clients to sell European equities and George Soros, the influential investor, telling Reuters that the US economy was in for a "lasting slowdown" and that America's banking system was "basically insolvent".

May wheat closed up £1.60 in London at £111.00 a tonne, after touching £112.00 earlier, and in Paris finished E1.00 higher at E138.00 a tonne, below its high of E137.5.

Dollar effect

US markets were hit even harder, with a stronger dollar adding to commodities' woes. In Chicago, May wheat stood 7 cents lower at $5.56 1/2 per bushel in lunchtime trade after touching $5.72 ¾ in early deals.

Soybeans, which had rocketed above $10 a bushel, fell back to $9.91 ¼ a bushel, down 4.25 cents on the day. Corn was less hard hit, slipping 0.5 cents to $4.04 per bushel.

Some industrial metals, which had set multi-month highs, and oil also slipped back into negative territory. The Baltic Exchange's main index, a sign of demand for maritime bulk freight, fell to a two-month low.

Vic Lespinasse, at, said: "The growing bearishness of the outside markets is too much for the grains to overcome and they have slipped back to lower levels once again."

He added that trading volumes were "on the light side".

By Mike Verdin

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