U.S. grains: Profit-taking pulls soy from two-year highs

(Scott Bauer photo courtesy ARS/USDA)

Chicago | Reuters — U.S. soybean futures backed off two-year highs on Friday, with investment funds locking in profits from the oilseed’s sharp rally this week.

Wheat firmed as heavy rains dented crop prospects in western Europe and caused some investors to cover bearish bets they had made on the market.

“Wheat caught another wave of chart buying on short covering as we plowed into new high ground, with traders talking about flooding in Europe again,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital said in a note to clients.

The gains in wheat spilled over to corn, which firmed slightly but faced resistance at the multi-month high hit on Thursday.

Renewed rain in Argentina heightened concerns about crop losses in the world’s number three producer, and kept soybean declines in check. New-crop soybean futures firmed slightly, buoyed by a U.S. Agriculture Department report that showed strong demand for supplies that will be delivered in the fall.

Chicago Board of Trade July soybean futures settled down 12-1/4 cents at $11.32 a bushel (all figures US$). The most actively traded contract peaked at $11.69 a bushel, its highest since June 2014, early in the session.

Soybean futures gained 4.4 per cent this week, its eighth straight week of gains, the longest streak since one of equal length in 2003. Soybeans have risen in 13 of the last 14 weeks.

Concerns are emerging that the run-up may have been overdone.

“We now regard the extent of the latest price rise to be excessive,” Commerzbank said in a market note on Friday.

CBOT July corn was three cents higher at $4.18-1/4 a bushel and up 1.5 per cent for the week.

CBOT July wheat futures rose 11-3/4 cents at $4.97-1/4 a bushel. The contract gained three per cent this week.

The condition of cereal crops in France worsened again last week, farm office FranceAgriMer said on Friday, in a sign that heavy rain is affecting crops in the European Union’s largest grain producer.

“Current weather in parts of Europe is not favourable, with wet conditions across much of France and Germany moving east into the Balkans and southern Russia,” David Sheppard, managing director of U.K. merchant Gleadell, said in a market note.

“This, together with forecasted warmer temperatures, could increase disease potential in crops.”

Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney, Nigel Hunt in London and Naveen Thukral in Singapore.

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