U.S. wheat futures edged lower on Friday but hovered near a 3-1/2 month high and notched their third straight weekly gain amid tightening global supplies and strong demand.
Soybean and corn futures were each narrowly higher in light volume at the Chicago Board of Trade. Prices rebounded from recent lows, with soybeans getting a boost when a closely watched advisory service slashed its forecast for the U.S. crop.
"It's a hangover day for wheat," said analyst Austin Damiani of Frontier Futures in Minneapolis. "It's been a pretty exciting two weeks for wheat traders, and today it seems like we're consolidating."
The wheat crop in major exporter Ukraine may decline by a third in 2014 due to heavy rains during the planting season, the country's agriculture minister said.
Rains earlier this year damaged the wheat crop in top grower China, while frost hampered wheat in Argentina and Brazil. All this led to increased export demand from the United States and Canada.
This year's Canadian wheat crop will be the largest ever, but the estimate of 33.026 million tonnes was within analysts' expectations, according to data released by Statistics Canada.
StatsCan "was at the high end of expectations but pretty much what we were thinking," Damiani said.
Benchmark CBOT December wheat settled 2-1/4 cents lower at $6.87 per bushel (all figures US$). Gains of more than nine per cent during the last three weeks are the biggest in more than a year.
CBOT December corn rose four cents to $4.43-1/4 but was still near its three-year low from earlier this week, pressured by the ongoing harvest of a record U.S. crop. The weekly loss of more than two per cent was the largest in three weeks.
Soybeans for November delivery gained 6-3/4 cents to $12.95, just above their recent 19-month low. Soybeans shed about 1.8 per cent for the week.
Soybeans were trading in negative territory until news at midday that private analytics firm Informa Economics lowered its estimate of U.S. 2013 soybean yield and production and raised its corn crop estimate.
Corn was supported in part by a correction in the closely monitored wheat-corn spread. Wheat earlier this week hit a premium of $2.50 per bushel of corn -- the biggest since September 2010. Corn's big discount will lead more animal feeders to turn to that grain instead of wheat, which they used heavily earlier this year.
"The potential glut of corn from the U.S., EU and Black Sea -- when available -- will compete with and shift demand away from wheat in feed diets," said David Sheppard, managing director of UK merchant Gleadell.
Commerzbank also expected a shift in demand.
"It is doubtful whether the price differential between wheat and corn will widen much further," Commerzbank said. "For, given the already substantial price difference, corn is likely to be substituted for wheat to meet demand for animal feed."
Wet weather into the weekend and another storm system late next week will slow harvesting of the 2013 U.S. corn and soybean crops, an agricultural meteorologist said.
The ongoing shutdown of the U.S. government -- including the Agriculture Department - is likely to delay the release of the U.S. harvest report on Monday and the agency's monthly supply and demand report due in a week.
-- Michael Hirtzer reports on grain and livestock commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.
Record-large Canadian crops come as no surprise, Oct. 4, 2013