Wheat prices fell on major international markets on Tuesday with futures in Paris hitting a one-month low in technical selling, while corn came under pressure amid harvesting of a record large US crop. US soya futures retreated from Monday's 13-month high hit on expectations of lower US plantings and higher demand and analysts said the rally could be running out of steam.
"If we were to see more pressure on corn and wheat you would expect that the rally in soyabeans will be difficult to sustain," said Garry Booth, trader at MF Global Australia. "As long the dollar remains subdued and funds don't aggressively sell we would expect these markets to hold. But if we saw a break of support on corn then we would expect wheat to pull back as well."
European milling wheat futures hit a one-month low in early trade as technical selling added to pressure from a pullback in U. S. prices linked to improved harvest weather in the United States. Selling pressure on Euronext was accentuated by the breaking of support at 220 euros and the exercising of options, traders said. The approach of Thursday's quarterly stocks report from the US Department of Agriculture and fears that funds could cut big long positions in grains were also making operators cautious, they said.
"Fundamentals remain bullish but volatility and nervousness have returned, in what should be stressed are modest trading volumes," one French trader said. Benchmark November milling wheat was down 6.25 euros or 2.83 percent at 214.25 euros a tonne by 1044 GMT, a lowest level since August 25.
Chicago Board of Trade December wheat fell 9-1/2 cent, or 1.34 percent, to $6.97 a bushel, after dropping 1.9 percent in the previous session. Elsewhere in major wheat producing countries, Australia's bulk wheat stocks fell 15.4 percent between July and August as exports picked up in response to Russia's recent ban on grain exports, and stocks are expected to diminish further in a tightening global market.
Deutsche Bank commodity analyst Michael Lewis said in a report published on Tuesday he expected medium-term fundamentals for corn to be more bullish than for wheat. "Not only are inventory-to-consumption ratios significantly lower in corn than wheat, but we expect production gains in US and Australian wheat will offset production losses in Russia, while corn market fundamentals are tightening from declining corn yields in the US and rising shortages in China," he said. "Since the reduction in Russian wheat production has been concentrated on animal feed rather than milling wheat we would also expect protein wheat... to outperform relative to lower protein wheat contracts," Lewis said.