U.S. grains: Wheat pulls back, registers weekly gain

Reuters — U.S. wheat futures fell for a second session on Friday on profit-taking but still ran up nearly three per cent this week, partly on fears of disrupted grain flows from the Black Sea region.

New-crop corn fell, while soybeans turned higher and both notched weekly gains after spillover support from wheat helped offset expectations of record U.S. crops.

Mike Zuzolo, president of Global Commodity Analytics, said the profit-taking that hurt wheat futures capped a “good technical week.”

Worries by wheat investors this week about escalating tensions between Russia and Ukraine, plus concern about poor quality in the western European harvest, sparked short-covering in Chicago after the price hit a four-year low last month.

A lack of actual disruption in wheat shipments from the Black Sea region weighed on the grain, however.

Chicago Board of Trade September wheat futures lost 2.2 per cent or 12-1/4 cents to fetch $5.49-1/4 a bushel, after falling 1.1 per cent on Thursday in its first drop in seven sessions (all figures US$). The contract still gained 2.8 per cent over the week.

Despite the pullback, the quality of wheat in major exporters France and Germany remains uncertain as rain hampers the harvest.

Signs of a buildup of Russian troops at the Ukrainian border and the announcement by Russia of an embargo on most food imports from the U.S. and EU unnerved traders this week. [Related story]

Market attention was also turning toward the U.S. Department of Agriculture’s next monthly crop supply/demand report on Tuesday, in which it is expected to raise its estimate of U.S. wheat production.

Analysts also expect USDA to raise sharply its corn harvest outlook and lift its soybean forecast after generally favourable growing weather.

December corn fell 2.1 per cent or 7-3/4 cents to $3.63-1/2 a bushel, weighed down by wheat.

Corn also came under pressure from USDA export data on Thursday, which pegged new-crop export sales of corn at 758,700 tonnes in the latest week, below trade estimates ranging from 800,000 to one million tonnes.

“Export sales were kind of shabby,” Zuzolo said. “I also get the strong sense that (traders) just aren’t going to want to buy corn before the August report is released next week because of the uncertainty of how big potential yield (might be). Being long could leave them high and dry.”

Despite Friday’s drop, December corn finished the week up 0.3 per cent, its first weekly gain in seven weeks, drawing support from the strength of wheat.

November soybeans turned up 6-3/4 cents or 0.6 per cent to $10.84-3/4 a bushel for a 2.5 per cent weekly gain.

Front-month August added 2.8 per cent, supported by short-covering ahead of the contract’s expiry next week, traders said.

— Rod Nickel is a Reuters correspondent based in Winnipeg. Additional reporting for Reuters by Julie Ingwersen in Chicago, Gus Trompiz in Paris and Colin Packham in Sydney.

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