UPDATE 1-U.S. corn, wheat futures fall as oil prices retreat

SEOUL, May 28 (Reuters) - U.S. grain futures, led by soybean and wheat, extended overnight losses to fall more than 1 percent in early Asian trading on Wednesday as a retreat in crude oil prices dampened demand for grains used to make biofuels.

A firmer U.S. dollar also weakened sentiment for the commodities, which are used by many large institutional investors to hedge against a weaker U.S. currency and inflation risk.

July corn futures on the Chicago Board of Trade dropped 1.3 percent to $5.90 per bushel and July wheat fell 1.05 percent to $7.51 per bushel.

Soybean futures were slightly lower, supported by supply concerns, as farmers in Argentina, one of the world's major soy exporters, announced their third strike in over two months against higher taxes on grain exports.

After the U.S. markets were closed, Argentine farmers said they would halt grains exports until June 2 to protest a sliding-scale export tax. [ID:nN27314388]

July soybean futures dropped 0.09 percent to $13.46-½ per bushel.

U.S. oil prices dropped nearly 3 percent to around $128 a barrel after hitting a record above $135 last week, weakening sentiment for grains such as corn and soybeans, which are used to make ethanol and biodiesel.

CBOT July rice futures tumbled to two-month lows on signs that global rice supplies were likely improve and expectations that Vietnam would lift export curbs from July to follow Cambodia, which decided on Monday to lift a two-month rice export. [ID:nHAN11484]

July rice futures fell 3.8 percent to $18.86 per hundredweight, its lowest since late March.

(Reporting by Miyoung Kim; editing by Ken Wills)

by http://money.ninemsn.com.au