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Reuters Wednesday January 16 2008

(Updates with closing prices, adds analyst quote, byline)
By Christine Stebbins

CHICAGO, Jan 16 (Reuters) - U.S. soybean, corn and wheat futures plunged on Wednesday amid a broad-based sell-off in commodities spurred by recession fears, traders said.
Additionally, the commodities were poised for a setback after a series of record highs as Wall Street money has been flowing into the grains, metals and energy markets as a hedge against inflation.

The biggest drop in the Chicago Board of Trade markets was in soybeans, down more than 3 percent when the March contract slipped nearly the 50-cent trading limit.
Fueling the recession talk was a move by China, the world’s top soy buyer, to tighten controls on food prices. With consumer inflation in the world’s most populous country at an 11-year high at 6.9 percent, the government ruled that food producers must obtain government permission to raise prices.

“Any time you have a major world importer or exporter putting on price controls, it’s a big bearish factor,” a Chicago trader said.

CBOT March soybeans closed 24-1/2 cents lower at $12.77 a bushel, March soybean oil ended 0.58 cent weaker at 52.73 cents per lb and March soymeal fell $9.20 per ton to $346.90.
The grains also slid. March wheat fell the 30-cent limit early to $9.02 a bushel but recovered to close just 5-1/2 cent lower at $9.26-1/2. The new-crop months from July forward ended steady to higher on worries about the size of the 2008 U.S. winter wheat crop.

March corn ended 6-1/2 cents lower at $5.02-1/2 a bushel.
“We’ve just got the markets all pumped up,” said analyst Roy Huckabay with The Linn Group, a Chicago trade house. “The break started in gold and crude oil ... everybody is talking about the freight rates being down — indicative of less demand.”

The New York gold market tumbled more than $20 an ounce to $882 and crude oil slipped below $90 a barrel for the first time since mid-December before closing about a $1 lower at $90.84 in the spot month.