SYDNEY/PARIS, March 18: Global wheat prices slid on Tuesday after Chicago Board of Trade soybean futures fell by their maximum limit as speculative funds ditched commodities on deepening worries over the crisis in financial markets.

A 3.84 per cent fall took the May soybean contract down by the maximum allowed limit to $12.52- at one point in Asian trade. The contract had also fallen by the maximum limit in US trading on Monday.

Shaken confidence in financial markets in the wake of the demise of investment bank Bear Stearns saw many funds pull out of positions in commodities.

Agricultural commodities had attracted a large inflow of speculative funds in recent months, partly because global shortages had pushed up prices.

Last night we had a whirlwind of global liquidation on the back of the bigger financial meltdown, said Brett Cooper of commodities broker M.F. Global. It was capital preservation for a lot of people.

All of these markets have pretty large speculative positions and fund positions and if that’s the sector of the market that’s liquidating, we may not have seen the lows yet.

Wheat markets in both Chicago and Europe fell in tandem with other commodity markets, with new crop contracts on Paris-based Euronext taking the biggest hit.

Old-crop May contracts were only 0.27 per cent lower at 280.75 euros per ton.

The problem is that we are seeing a contradiction between fundamentals which are still looking solid and a stormy financial environment, said one French trader, referring to strong export demand.

Tokyo traders saw agricultural futures staying weak until after the US Federal Reserve’s Open Market Committee (FOMC) meets on Tuesday. The US central bank is widely expected to decide on further interest rate cuts.

The market remains in a phase of cutting positions in grains due to uncertainties in equities and currencies. The market will stay nervous until we see the outcome of the FOMC meeting, said Hiroyuki Kikukawa, analyst at IDO Sec in Tokyo.—Reuters