U.S. grains: Wheat retreats for second day from 11-month high

Chicago | Reuters — U.S. wheat futures on Friday extended a setback from an 11-month high, while technical selling snapped a four-session rally in soybeans that had been fuelled by low supplies.

Wheat has climbed this month on concerns about drought hurting U.S. winter wheat and concerns that tensions between Ukraine and Russia might interrupt global trade. The market, however, was due for a setback after the nearby contract on Thursday reached its highest level on a continuation chart since late April, traders said.

Soybeans sank after the May contract on Thursday neared its high amid concerns about tightening U.S. inventories. Projections for reduced Chinese demand for soybeans and for soybean imports to the U.S. from South America have helped to ease supply fears, traders said.

“The wheat, like the soybeans, has plenty of risk to the downside,” said Mike North, senior risk management advisor for First Capitol Ag. “Let’s face it. The world has plenty of wheat.”

Chicago Board Of Trade May wheat tumbled 10-1/2 cents, or 1.5 per cent, to $6.93-1/4 a bushel, well off Thursday’s 11-month high of $7.23-1/2 (all figures US$).

CBOT May soybeans sank 25 cents, or 1.7 per cent, to $14.08-3/4 a bushel. May corn inched up 1/2 cent, or 0.1 per cent, to $4.79 a bushel.

Commodity funds sold an estimated 8,000 soybean contracts and 5,000 wheat contracts.

Strong U.S. crushing and export demand have tightened domestic soybean supplies of the oilseed and pushed up prices. A large harvest in South America and imports from Brazil should help to compensate for shrinking inventories, North said.

“The market’s been a whipsaw,” North said. “It’s been a constant battle between people injecting money into the marketplace and talk of Chinese cancellations.”

Soybean demand uncertainty

Sinograin Oils Corp., China’s state-owned grain reserve company, said on Friday that it was not expecting a large number of cancellations of soybean cargoes this year. Traders have worried that bird flu outbreaks in China would hurt demand by reducing the number of chickens consuming feed.

On Thursday, an executive at a leading Chinese soy buyer said the company was in talks to resell five or six cargoes from Brazil, equivalent to about 360,000 tonnes of soybeans, to the U.S. market.

“There is ongoing talk and speculation and unconfirmed rumours about what is being canceled or diverted,” said Terry Linn, analyst at the Linn Group. “Everybody understands at the end of day, the U.S. is importing beans, and maybe we will have some cancellations. We are doing what we need to do there.”

Corn futures were little changed amid spillover pressure from losses in the wheat market, traders said.

Private exporters struck deals to sell 340,000 tonnes of U.S. corn to Egypt for delivery during the 2013-14 marketing year, which started on Sept. 1, according to the U.S. Department of Agriculture.

“The corn market does not have much drive up or down,” Linn said.

— Tom Polansek reports on agriculture and ag markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.

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