Wheat prices fell on Friday as investors took profits, but the nearby contract ended with its biggest weekly percentage gain in nearly 2-1/2 years on concerns about smaller European crops. Corn and soya prices recovered from early slips on profit-taking as concerns grow about a hot forecast for the US Midwest.
Despite wheat's pull-back, the underlying mood remained bullish due to prospects for reduced wheat output in drought-stricken Russia, Europe's leading wheat producer, and in western Europe. "There was a little profit-taking, which is quite normal but it's Friday and I don't think anyone wants to press the market before the weekend," said Joe Bedore, CBOT floor manager for trade house FC Stone. "I don't think the rally is over yet. Nothing has changed. There are still hot weather forecasts around."
Chicago's CBOT September wheat futures retreated from a 13-month high but rose off earlier lows to fall 9 cents or 1.5 percent to $5.87-1/4 a bushel. Nearby wheat rose 12 percent during the week dominated by European crop concerns, its biggest weekly percentage gain since February 2008.
The spot wheat contract rose 25 percent so far this month and is the best performer in July among the 19 commodities in the Reuters-Jefferies CRB index. In Russia, SovEcon agricultural analysts cut their forecast for the country's 2010 grain crop further down to below 75 million tonnes from 77 million to 81 million tonnes, as a severe drought advanced to new producing regions, but kept the wheat outlook unchanged at 49 million to 51 million tonnes.
"There is fundamental basis to this rally, so I wouldn't put a huge stock in this move today as there is momentum to drive wheat higher in the short term," said Toby Hassall, an analyst with CWA Global Markets in Sydney. French analyst Strategie Grains cut its estimate for the European Union's 2010 soft wheat crop to 129.5 million tonnes, down 3.6 million from last month.
US corn and nearby soya shook off profit-taking pressure with late buying, supported by concerns about unfavourably hot, dry weather for the US Midwest in late July and August, traders said. CBOT September corn rose 2-1/4 cents to $3.94-3/4 per bushel. CBOT August soyabeans gained 1/2 cent at $10.19-1/2 a bushel, but back months fell. Nearby corn rose 5.2 percent for the week, its third straight weekly gain, but soyabeans posted a weekly loss, 0.6 percent, after two weeks of gains.