NEW DELHI: US wheat futures eased on Thursday, snapping a seven-day rally that was their longest stretch of gains since July, as a sharp rise in prices temporarily hit export demand.
Analysts see the fall as a blip and expect wheat to rise again, fuelled by dry weather conditions in the United States, the biggest supplier, and poor prospects for supply from other export powerhouses, such as Russia and Ukraine.
On Monday, the US Agriculture Department (USDA) said the US Plains red winter wheat was in the worst condition in history, due to dry conditions, as the crop enters winter dormancy.
"There has been demand destruction due to higher prices, which are likely to go up again, as the outlook remains bullish in the backdrop of what we are seeing in the Black Sea region," said Adia Lin, operations director at the Singapore arm of Australian investment company Global Commodities Ltd.
The wheat crop in both Russia and Ukraine has suffered severe damage this summer, so much so that Russia may have to import.
This will fuel demand for US and European wheat, but the exportable surplus has been cut after drought damaged harvests.
Chicago Board Of Trade December wheat dropped 0.2 percent to $8.74-1/4 by 0436 GMT, after gaining 3 cents in the previous session. The most active March wheat also fell 0.2 percent to $8.89-1/2 a bushel.
December corn fell 0.2 percent to $7.58-3/4 a bushel, having edged up slightly in the previous session.
Poor demand weighed on corn, Lin said.
US ethanol production, which accounts for nearly 40 percent of domestic corn use, fell 1 percent last week in the third straight week of declines.
January soybeans rose 0.1 percent to $14.48, fuelled by concern over smaller-than-expected South American production.
Rains are forecast for Brazil's soybean center-west plains this week. But southern growing regions are set to remain dry, leaving two of the largest producing areas drier than normal in November.
Top global soy buyer China on Wednesday bought 290,000 tonnes of US soybeans, the USDA said. The purchase was an indication to bullish traders that historically high prices have not slowed or rationed demand for the oilseed.
Commodity funds were said to have sold 1,000 soybean contracts and 3,000 corn contracts while buying 3,000 wheat contracts on Wednesday.
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