US wheat fell nearly 3 percent and corn posted its biggest drop in a month on Wednesday on uncertainty about the outcome of a crucial European Union summit seeking solutions to the eurozone debt crisis. Reminders of strong export competition from the Black Sea region further weighed on the grains, along with bearish technical signals.
Macroeconomic worries held the spotlight as the dollar firmed on concerns the EU summit would fail to deliver a decisive response to the debt crisis. According to a draft statement from a leaders' meeting in Brussels on Wednesday, EU governments will signal readiness to back banks with guarantees to avert a credit freeze but give no overall figure for recapitalising lenders.
Jitters about the summit's outcome appeared to keep traders on the sidelines. With 45 minutes left to trade, volume in Chicago Board of Trade wheat, corn and soybean futures was down 20 to 30 percent compared to the 30-day averages. "It's very quiet and with the EU not commenting yet, it's certainly not bullish," said Mary Ann Kwiatkowski, analyst for Amber Trading in Chicago.
CBOT December wheat was down 16-3/4 cents, or 2.63 percent, at $6.19-1/2 per bushel. December corn was down 13-1/2 cents, or 2.07 percent, at $6.37-1/4 a bushel and most-active January soybeans were down 15 cents at $12.10-1/2. Weak chart signals were a factor. Front-month contracts in CBOT wheat, corn and soybeans have been unable to match highs hit last week, triggering long liquidation.
"We've lost the buying interest and we've started seeing some long liquidation take place. Right now, there is no strong fundamental support to offset the selling," said Shawn McCambridge, grains analyst with Jefferies Bache in Chicago. CBOT wheat was pressured by news that Egypt, the world's largest wheat importer, bought 120,000 tonnes of Russian wheat at its latest tender at $243.44 per tonne.
No US wheat was offered at the tender, a signal that US grain is not priced competitively. "If you look at (the price) where the purchase was made, and where Ukraine came into the market, and where EU and Argentine values were at, we probably we won't be offering anything for that type of business for a while," McCambridge said. Similarly, corn was pressured by news that Japan bought a cargo of corn from Ukraine, a country that is likely to produce a record crop this year.
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