US wheat futures fell for the third straight day on Tuesday, with the benchmark Chicago contract shedding 1.9 percent to hit a 2-1/2-week low, as investors took more profits from the market's recent surge to two-year highs on crop worries in the drought-stricken Black Sea region.
"We have a market that just is exhausting the buying interest right now," said Shawn McCambridge, grains analyst with Prudential Bache Commodities in Chicago. "Things that took us to our recent high have been pretty well digested and traded. Now the market is left trying to find something else." Soybean and corn futures bucked the downward trend in wheat amid growing concerns about hot weather causing some damage to those developing US crops.
The recent slump in wheat futures has come despite a pick-up in export demand for US supplies. The Egyptian government's main wheat buyer said on Tuesday it bought 55,000 tonnes of US hard red winter wheat for shipment in September. That was the first purchase of US supplies through an official tender since September 2009, although private Egyptian buyers have been buying US supplies during the past year.
"Business is picking up and most of it is hard red winter (wheat) because it's the best quality available and they (US farmers) had a big crop," said Paul Haugens, vice president of Newedge USA. Overseas buyers have viewed US wheat as too expensive for much of the past year and most looked to countries such as Russia for cheaper supplies. But Russia banned exports due to this summer's drought, forcing countries to seek wheat elsewhere.
Chicago Board of Trade soft red winter wheat futures for September delivery settled down 12-3/4 cents at $6.51 per bushel. The contract closed at its lowest level since July 29. But new-crop contracts showed some strength, with July 2011 wheat ending up 2-1/4 cents at $6.93-1/4 a bushel amid uncertainty about the size of next year's crop.
Wheat markets were awaiting firmer indications about the impact of the drought on the upcoming sowing season, and about how much Black Sea grain will be available for export, with Ukraine confirming plans to limit grain imports to 2.5 million tonnes until the year end.
CBOT corn for September delivery settled up 7-1/2 cents at $4.14-3/4 a bushel, while front-month September soybeans rose 11-1/4 cents to $10.45-1/4 a bushel. The US Department of Agriculture lowered its condition ratings for the corn crop on Monday. Hot weather in key growing areas of the United States and severe flooding in parts of Iowa sparked the downgrade.
USDA's weekly ratings report pegged the corn crop as 69 percent good to excellent, down from 71 percent last week and below analysts' expectations of 70 percent. Heavy rains in South Dakota appeared to limit the potential of the corn crop, scouts on an annual tour found. Scouts on another leg of the tour through Ohio found signs of heat stress that could hamper corn yields. Prospects for rising demand for feed corn due to tightening wheat supplies also have boosted corn. Strong export demand from top importer China added support to soybean prices. Prices at 2:17 pm CDT (1917 GMT).
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