Chicago | Reuters –– U.S. wheat futures retreated from an 11-month high on profit-taking on Thursday, while soybeans rose for the fourth consecutive session on concerns about tightening supplies.
Strength in the U.S. dollar loomed over the markets, as a firm dollar makes U.S. grain less competitive on the global market and U.S. commodities less attractive as a hedge against inflation.
Wheat fell after prices jumped on Wednesday on worries that dry conditions will hurt upcoming harvests in the U.S. southern Plains. A day later, the weather was “not quite as alarming,” said Rich Feltes, vice-president of research at RJ O’Brien.
Commodity Weather Group said forecasts turned slightly wetter for the last days of March and first days of April. However, the Plains breadbasket should remain dry for most of the next 10 days, stressing the hard red winter wheat crop as it comes out of dormancy, according to the forecast.
The crop, which was planted in the autumn, is starting to grow again after its winter sleep and will be harvested in the late spring and early summer.
Chicago Board of Trade May wheat sank 12 cents, or 1.7 per cent, to $7.03-3/4 a bushel, after rising more than six per cent in the previous two sessions (all figures US$). Earlier on Thursday, the nearby contract touched its highest price since late April on a continuation chart.
“It’s a pretty dramatic turn here,” Jack Scoville, vice-president at Price Futures Group, said of the drop in prices.
In the European Union, analyst Strategie Grains raised its forecast for this year’s soft wheat harvest.
Soybeans extend rally
May soybeans ended up 2-1/2 cents, or 0.2 percent, to $14.33-3/4 a bushel after shaking off losses. The market still finished well off its session high of $14.56-1/2, which was near the May contract high of $14.60 from March 7.
Prices have rallied recently on concerns about tight U.S. supplies due to strong domestic crushing and export demand. However, traders said that imports of soybeans from South America should help to alleviate tightness.
A leading Chinese soy buyer is in talks to resell five or six cargoes from Brazil, equivalent to about 360,000 tonnes of soybeans, to the U.S. market, an executive at the firm said.
“We actually can use the beans up here. There’s no doubt about it,” Scoville said.
Private exporters reported the sale of 120,000 tonnes of U.S. soybeans to China, the world’s top soy importer, for delivery in the marketing year that starts on Sept. 1, the U.S. Department of Agriculture said.
U.S. soybean export sales last week were 639,700 tonnes, within analysts’ estimates for 200,000 to 900,000 tonnes.
Weekly U.S. wheat export sales of 597,100 tonnes were within estimates for 300,000 to 700,000 tonnes. Corn export sales of 745,800 tonnes were within estimates for 500,000 to 1.5 million tonnes.
China bought its first U.S. corn in more than two months last week, the USDA said, despite an unresolved dispute over a biotech variety that has not been approved for import by the Asian nation.
May corn slid 9-1/4 cents, or 1.9 per cent, to $4.78-1/2 a bushel.
Commodity funds sold 9,000 corn contracts and 7,000 wheat contracts, traders said.
— Tom Polansek reports on agriculture and ag markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.