CHICAGO: US 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 fueled by low supplies.
Wheat has climbed this month on concerns about drought hurting US 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 US inventories. Projections for reduced Chinese demand for soybeans and for soybean imports to the United States 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 percent, to $6.93-1/4 a bushel, well off Thursday's 11-month high of $7.23-1/2.
CBOT May soybeans sank 25 cents, or 1.7 percent, to$14.08-3/4 a bushel. May corn inched up 1/2 cent, or 0.1 percent, to $4.79 a bushel.
Commodity funds sold an estimated 8,000 soybean contracts and 5,000 wheat contracts.
Strong US 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 US market.
"There is ongoing talk and speculation and unconfirmed rumors about what is being canceled or diverted," said Terry Linn, analyst at the Linn Group. "Everybody understands at the end of day, the US 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 US corn to Egypt for delivery during the 2013/14 marketing year, which started on Sept. 1, according to the US Department of Agriculture.
"The corn market does not have much drive up or down," Linn said.
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