US corn falters, export gloom hits wheat

HAMBURG: US corn futures dipped on Wednesday as investors locked in gains after sharp rises over the previous session while wheat fell as Russia tightened its grip on global export markets.

Traders said some money was being taken off the table after a good run through July as the dollar weakened on US debt concerns.

Chicago's December corn contract eased 0.47 percent by 1012 GMT to $6.83-1/2 per bushel, while the spot September corn contract fell 0.47 percent to $6.86-1/2.

The December corn contract had gained almost 2 percent on Tuesday on expectations that the US Department of Agriculture (USDA) will lower its yield estimate in its August 11 supply and demand report.

Wheat is being pulled down by weak US wheat exports after a dramatic surge in Russian sales after Russia ended its export ban on July 1.

US Wheat for September delivery fell 0.18 percent to $6.92-3/4 per bushel. The contract rose 0.8 percent on Tuesday, dragged up by corn's gains and short-covering.

"The global wheat market seems to be suddenly sliding into Russian domination," one European trader said. "Russian wheat is so cheap it seems to be winning just about every tender in the market."

Egypt on Tuesday bought 120,000 tonnes of Russian wheat in a tender.

The Russian wheat was bought at around $250 per tonne, free-on-board (fob). French and U.S offers were around $30 a tonne more expensive at between $280 to $290 per tonne (fob).

Wheat deals reported on Wednesday continued to underline the looming dominance of Black Sea and Russian wheat in export markets.

Syria bought 127,000 tonnes of wheat, thought likely to come from Russia and Romania. The United Nations also bought 90,000 tonnes of wheat for Ethiopia from the Black Sea. Traders in Asia on Wednesday said they also expected more imports of Russian wheat in their region.

But the downside in grains was limited by continued dollar weakness and concern about heat damage to the US crop.

The dollar is being dragged down by markets fretting about the prospect of a US debt default and sovereign credit rating downgrade. A weak dollar means US priced commodities are cheaper for buyers in other currencies.

"There has been a general upward run in commodities because of the weakness in the US dollar," said Andrew Kaleel, chief executive of commodities fund manager, H3 Global Advisors.

The US corn crop has been hit by scorching temperatures across the US Midwest grain belt at the critical pollination stage which helped price gains this week.

Output this year is likely to be below 13 billion bushels due to hot weather, compared with the USDA's July estimate for 13.47 billion, Pete Anderson, the president of brokerage INTL FCSTone told Reuters in an interview.

Anderson said price gains would be capped by demand rationing and were likely to meet resistance at $8 per bushel.

"Rains are on track to hit the northern corn belt through to the weekend but Illinois, the most stressed of the major corn and soybean states, will mostly miss out on the heavy rain," ANZ Banking Group's commodity team said in a market note.

ANZ said dry weather across the southern corn belt and northern Delta could further exacerbate conditions.

Meanwhile, Chicago soybeans for September delivery were steady, up 0.11 percent at $13.81-3/4 supported by an expected resumption of buying by China, the world's top soy importer.

Copyright Reuters, 2011