Wheat drops two percent

US wheat futures tumbled on Tuesday on profit taking and technical selling and as the dollar's strengthening against the euro added to already-challenging US wheat export prospects. Corn followed wheat lower in a profit-taking setback after the market hit a near six-month high the previous day, while soyabeans closed lower after a choppy session, dragged down by late-day fund long liquidation and technical selling.
Trading was light ahead of this week's New Year holiday, with commodity funds squaring positions before year-end. Funds were net sellers of 2,000 soyabean contracts, 4,000 wheat and 5,000 corn, trade sources estimated. Chicago Board of Trade March wheat fell 13-1/2 cents, or 2.2 percent, to $6.02 a bushel. Selling accelerated as the contract fell below its 200-day moving average around $6.12-1/2.
Traders were monitoring a blast of cold weather in the US Plains wheat belt as some of the dormant hard red winter wheat crop lacks a protective snow cover. However, the most recent forecasts were less worrisome than earlier this week. "The weather forecast for the wheat is not as crop-damaging as feared. Weather bulls are exiting the wheat, and that is spilling into the corn," said Mike Zuzolo, president of Global Commodity Analytics.
The euro hit a 29-month low against the dollar on Tuesday, making US wheat less competitive on the global market. The prospect of Greece dropping the euro returned to haunt the currency after a failed effort to elect a new Greek president on Monday. CBOT March corn was 6-1/4 cents, or 1.5 percent, lower at $4.06-1/2 a bushel, its third decline in four sessions and the steepest in four weeks. Traders cited accelerated selling as the contract breached its 10-day moving average around $4.10-1/4.
CBOT January soyabeans closed lower for a second straight day, shedding 4 cents, or 0.4 percent, to $10.37-3/4 a bushel. Soyabeans reversed earlier gains after a steep late-session drop in soyameal, due in part to brokers exiting long soyameal/short soyaoil spreads before the new year. Steady export demand from top buyer China offered some underlying support to soyabean prices, although cheaper supplies from South America are expected to begin flooding the market by February. Analysts expect a massive South American soya crop after largely favourable crop weather this season. One closely followed crop scout raised his Brazilian soya crop outlook by 1 million tonnes this week, traders said.