May 17, 2010

Wheat and soy futures slumped to the lowest in five weeks as investors quit riskier assets on concern that Europe's debt crisis will slow economic recovery.

Wheat for July delivery dropped as much as 0.9% to US$4.6725 a bushel, the lowest price for the most-active contract on the Chicago Board of Trade since April 6. July soy lost as much as 1% to US$9.4375 a bushel, the lowest price since April 9.

The MSCI Asia Pacific Index retreated as much as 2.5%, the lowest since February 26. The Greek debt crisis that is threatening to break up the euro zone may spill over to Eastern Europe and spoil the region's fragile recovery, the European Bank for Reconstruction and Development said.

"We're seeing risk aversion in the market," Michael Pitts, director for commodity sales at National Australia Bank Ltd. said. "That's pushing commodities down lower in the short-term."

Hedge-fund managers and other large speculators increased their bets on lower wheat prices for the first time in six weeks, based on US Commodity Futures Trading Commission data.

Speculative net-short positions, the difference between orders to buy and sell the commodity, increased 9.3% to 36,893 contracts on the Chicago Board of Trade in the week ended May 11, the commission said in its weekly report on May 14.