US wheat futures end two percent lower, corn also drops

US wheat futures ended nearly 2 percent lower snapping a six-session rally on Friday, on bigger-than-expected government production estimates. Traders noted profit-taking and hedge pressure ahead of the weekend. Corn futures traded mixed Friday but ended lower across the board on bearish supply and demand data from the US Department of Agriculture, while soyabean futures on the Chicago Board of Trade rallied 1 percent, helped by tight supplies.
Declines in the wheat market were due both to technical signals the market was overbought and fundamental pressure tied to the USDA report released early Friday, traders said. USDA pegged 2010/11 US all-wheat production at 2.216 billion bushels, above an average trade estimate for 2.163 billion bushels and up 7 percent from last month's projection.
"The wheat market today just reflected the overbought conditions after this week's strong gains," said Prudential analyst Shawn McCambridge. "The USDA reports provided pretty much what the market had expected so we just fell back to a little late profit-taking and some hedge pressure.
USDA projected US winter wheat yields at 46.9 bushels per acre, the third-highest on record, and estimated US spring wheat production at 606.8 million bushels. That would be the third-largest crop on record and well above an average trade estimate of 566 million bushels and 2009 production of 584 million bushels.
In another bearish projection, USDA said US wheat ending stocks for 2010/11 would be 1.093 billion bushels, above an average of analysts' estimates for 1.047 billion. Still, world numbers were more friendly as the USDA pegged Canada's 2010/11 wheat crop at 20.50 million tonnes, below the June forecast for 24.50 million. Wheat production in the former Soviet Union countries was estimated at 100.62 million tonnes, below the June forecast for 108.12 million, and world wheat production fell by 7.45 million tonnes, lower than analysts were expecting.
Wheat prices retreated after adding 20 percent since June 29, spurred higher by concerns about crop-damaging heat in Europe. CBOT July wheat closed down 10-1/2 cents, or 1.9 percent, and the more-active September ended down 10-1/2 cents, or 1.9 percent, at $5.38. CBOT nearby corn closed down 2-1/4 cents at $3.75-1/4 while September corn closed down 2 cents at $3.83-1/2.