Nov. 27 (Bloomberg) -- Soybeans, corn and wheat slumped after Dubai’s bid to reschedule debt sent equities tumbling and eroded investor confidence in commodities.

Stocks and commodities dropped, Treasuries jumped and credit default swaps climbed on concern Dubai’s proposal to delay debt payments may trigger the biggest sovereign default since 2001. Crude oil slumped and the dollar advanced.

“Investors are trying to reduce risk in their investments,” said Hiroyuki Kikukawa, general manager of research at Tokyo-based IDO Securities Co. Lower crude prices and the dollar’s strength also put pressure on grains and other commodities, he said.

Soybeans for January delivery lost as much as 3.2 percent to $10.21 a bushel, the most for the most-active contract since Oct. 2, on the Chicago Board of Trade and were at $10.3175 at 1:11 p.m. London time. The contract is heading for its first weekly decline in three weeks.

Crude oil fell as much as 7.1 percent to $72.39 a barrel on the New York Mercantile Exchange, where markets didn’t settle yesterday because of a public holiday. The Dollar Index rallied as much as 1 percent today.

China, the world’s largest soybean buyer, will buy the oilseed and corn from northeastern areas in December through April 30 to boost farmers’ incomes and encourage them to continue growing the crops, the National Development Reform Commission said today.

Corn Declines

Corn for March delivery dropped as much as 3.2 percent to $3.95 a bushel and last traded at $3.9775. The contract is heading for its first weekly decline in four weeks. The Chicago market was shut yesterday for the Thanksgiving Day holiday.

Wheat for March delivery in Chicago lost as much as 3.4 percent to $5.52 a bushel before trading at $5.5725. The grain is also heading for its first weekly decline in four weeks.

Australia’s wheat crop forecast for the current harvest was cut by National Australia Bank Ltd. after frosts in New South Wales and hot weather in Victoria and South Australia states reduced yields.

Production may be about 21 million metric tons, down 2 percent from last harvest and lower than the 23 million tons forecast in October, the bank said today in a report.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

Last Updated: November 27, 2009 08:12 EST