(Reuters) – Chicago wheat dropped on Wednesday, falling for a fourth consecutive session as technical selling continued in the grains complex, with soybeans also being pushed down after touching record high prices on Tuesday.
Rains across the U.S. Plains improved the prospects for winter crop planting and as cheap exports from Russia and other Black Sea producers continued to pressure the market.
“I think we are seeing a technical pullback today in soybeans, corn and wheat with some squaring and reduction of positions before some high risk events such as the possible European Central Bank bond announcement on Thursday and the U.S. jobs reports on Friday,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“The dollar is also stronger which is negative for U.S. exports at a time of continued competition in export markets, especially from Russian wheat.”
Chicago Board of Trade December wheat fell 0.4 percent to $8.84-1/2 a bushel by 1037 GMT.
Chicago spot September soybeans were down 0.4 percent at $17.64 cents a bushel after hitting an all-time high of $17.94-3/4 per bushel on Tuesday, piercing the high of $17.80-3/4 hit last week as investment funds bought futures after the worst U.S. drought in 56 years devastated crops.
November soybeans were down 0.3 percent at $17.61-1/2 a bushel and December corn fell 0.7 percent to $7.99 a bushel.
Cheap Russian wheat is still pouring into global export markets despite fears drought will cut the Russian crop by 30 percent this year. Russian wheat was offered at an unbeatable $40 a tonne cheaper than U.S. supplies in a weekend purchase tender from Egypt, traders said.
“It has taken a few large tenders for the market to realise that U.S. wheat is too expensive,” said one Melbourne-based analyst. “The weather in the U.S. wheat belt is looking better for the winter crop seeding.”
The tail end of Hurricane Isaac left welcome rainfall across a broad swathe of the central U.S. Midwest, providing soil moisture ahead of autumn seeding of the 2013 crop. More rain is forecast for the weekend in the Midwest and much of the United States.
Black Sea wheat has been sought after over the past few weeks, boosting expectations that Russia will curb exports amid dwindling domestic supplies, although the government denied on Friday it was planning to limit sales.
Soybean prices remained supported because of expectations drought damage to the U.S. Midwest crop will follow major falls in Argentine and Brazilian crops this year.
Brazilian soybean exports tumbled in August after surging the previous month, data from the trade ministry showed, as stocks run low after importers snapped up large quantities in the face the U.S. drought.
In corn, investor attention is turning to the U.S. harvest which is still running at a record pace despite rains related to Hurricane Isaac keeping many farmers out of their fields last week.
“I see some negative momentum on corn near term although there are buyers waiting in the wings who would react to any pullback in grains, so I am not expecting a major fall,” Saxo Bank’s Hansen said. “But we might see a willingness to ease out of some positions in the coming days as we see some risk avoidance by some investors.”
Corn hit an all-time-high of $8.49 a bushel in August as the summer heatwave roasted the U.S. Midwest grainbelt.
The U.S. Department of Agriculture said on Tuesday that 10 percent of the U.S. corn crop had been harvested as of Sept. 2, up from 6 percent a week earlier. That compares with 3 percent a year ago and the five-year average of 3 percent.
“First high temperatures and drought while plants were developing, and now heavy rainfall during harvesting: the list of unfavourable weather conditions with which corn and soybean plants have been confronted this year in the U.S. appears simply endless,” Commerzbank said in a note.
Focus is also on South America where farmers have started planting corn. A good South American crop in early 2013 could help relieve global supplies after the disastrous U.S. crop.
Plentiful rains have ensured a good start to the 2012/13 corn growing season in Argentina, one of the world’s biggest grains suppliers.
