(Reuters) – Chicago corn and wheat futures edged down on Wednesday after rising in the previous session on worries over crop production in South America and unrest in Ukraine, but erratic weather kept grains markets on edge.
Extreme weather in the United States, South America and Australia is likely to support prices despite easing tensions between Russia and Ukraine, a major corn and wheat exporter.
“In regard to the Americas, both North and South, the supply concerns are driven by weather. In the Black Sea region, the supply concerns are driven by potential trade disruptions as a result of the Ukrainian-Russian situation,” said Luke Mathews, a commodities strategist at Commonwealth Bank of Australia.
“It’s a very fluid situation that we currently have in the Black Sea region. Events over there in the coming few days, whichever way they unfold, will certainly have an impact on global corn and wheat prices in particular.”
CBOT May corn had fallen 0.72 percent to $4.80.3/4 a bushel after rising as far as $4.85 on Tuesday, its highest since September. Tuesday’s 2.9-percent gain, its biggest since Jan. 10, pushed the contract to settle above its 200-day moving average.
CBOT May wheat was down 1.01 percent at $6.37 a bushel, having rallied to $6.45-3/4 on Tuesday, its strongest since December.
U.S. Gulf basis offers for corn and wheat were firm on Tuesday, with nearby hard red winter wheat values up as the political unrest in Ukraine increased demand for U.S. grains.
While Russian President Vladimir Putin delivered a robust defence of Russia’s actions in Crimea, he said he would use force in Ukraine only as a last resort.
U.S. wheat ratings have dropped as frigid temperatures and dry soils threatened the winter wheat crop across the U.S. Plains throughout February, according to government data released on Monday.
Drought conditions across Australia’s east coast will cut production of key agricultural commodities such as wheat and beef next season and reduce exports, the government’s chief commodities forecaster said on Tuesday.
Elsewhere, private analytics firm Informa Economics lowered its estimate of the Brazilian soybean crop to 88.8 million tonnes and cut its Argentine soybean harvest forecast to 54 million tonnes, trade sources said.
China’s biggest grains trader COFCO Corp is in talks to buy Noble Group Ltd’s agribusiness arm in a deal that would value the division at around $1 billion, people familiar with the matter said.
