SINGAPORE: US wheat and corn futures steadied on Wednesday after a sell-off in the previous session spurred by fears over global economic growth, while soybeans edged lower but clung near five-month highs.
Soybeans, which analysts say have the tightest supply-demand fundamentals in the face of strong Chinese demand and weather-curbed output forecasts in South America, rose on Tuesday, bucking a broad-based decline in commodity and equity markets.
"By comparison to other grains, beans' balance sheet is possibly tighter, but you can argue that US soybean prices will have to do some more work to maintain acreage or to encourage additional planting," said Brett Cooper, a senior manager of markets at FCStone Australia.
The market is expecting the US government to lift its forecast for US soybean export demand when the US Department of Agriculture releases a key report on Friday.
Traders and analysts also predict a reduction in drought-hit Brazil's soybean output. Hamburg-based oilseeds analyst Oil World has cut its forecast of Brazil's 2012 soybean crop by 1.5 million tonnes to 68 million tonnes, a day after two industry groups cut their own forecasts.
Chicago Board of Trade May soybeans eased 0.2 percent to $13.33 per bushel by 0516 GMT, not too far off the five-month high of $13.36-1/2 touched on Monday.
CBOT May corn was little changed at $6.53-3/4, after falling 1 percent on Tuesday.
Chicago May wheat was also early flat at $6.58 per bushel, after sliding more than 2 percent in the previous session -- its biggest single-day fall since Feb. 10.
Wheat's decline mirrored the weakness in other markets as worries about debt-laden Greece resurfaced and the euro zone economy contracted in the last quarter of 2011.
Greek private creditors have until Thursday night to say if they will participate in the exchange that is a key part of a bailout programme to help Greece manage its wrecked finances and meet a debt repayment on March 20.
Fundamentally, the wheat market is well supplied and there's nothing to fear at the moment unless any production risk emerges over the course of next month for the northern hemisphere crop, said Cooper of FCStone Australia.
In Australia, the world's No. 4 wheat exporter, farmers will reduce wheat plantings in 2012/13 in response to lower global prices, although the country is still expected to produce an above average crop after two straight years of record output.
Corn prices are now at a discount to wheat, and plentiful supplies could allow wheat to narrow the gap.
"One thing that wheat's been able to do in the past 12 months is displace corn as far as feed usage goes. At some point in time wheat's going to try and continue to do that," said Cooper.
Analysts believe the USDA will trim its estimate of 2011/12 US and world wheat stocks in its Friday report to 212.6 million tonnes, from its February forecast of 213.1 million tonnes.
"Weather conditions in North America still need to improve, with dryness persisting in the southwest US Great Plains, the US northern plains and the Canadian Prairies," Commonwealth Bank of Australia commodity strategist Luke Mathews said in a note.
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