SINGAPORE: US wheat fell 0.4 percent on Wednesday, snapping a three-day rising streak, while corn dipped after climbing to contract highs in the last session as investors booked profit amid Moody's downgrade of Japan's sovereign debt rating.
Wheat and corn futures remain underpinned by harsh weather in the United States which is threatening to curb production.
"The US dollar is starting to creep a little bit higher so that is possibly a source of downside price pressure," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia.
"More broadly the focus of the grain markets remains on production issues which are confronting the corn crop and also concerns that have crept into hard red winter wheat crop planting."
Chicago Board of Trade actively-traded December wheat fell 0.4 percent to $7.81-1/4 a bushel, after touching $7.86-1/2 a bushel in the last session, the highest since June 16.
December corn fell 0.3 percent to $7.41 a bushel from a contract high of $7.44 a bushel on Tuesday and November soy dipped 0.2 percent to $13.94-1/2 a bushel.
The grain markets are closely tracking movements in outside markets, including stocks and precious metals.
"More generally the grain markets, like other markets, will increasingly focus on Fed Chairman Bernanke's speech come Friday," said Mathews.
Asian shares fell as a rally fuelled by speculation that the Federal Reserve may signal further moves to support the struggling US economy swiftly petered out, while gold rebounded from its sharpest one-day slide in 18 months.
Moody's Investors Service cut its rating on Japan's government debt by one notch to Aa3, blaming a build-up of debt since the 2009 global recession and the revolving-door leadership that has hampered effective economic strategies.
The dollar index , which measures the strength of greenback against a basket of currencies, firmed 0.1 percent, making the dollar priced commodities less competitive in the international market.
The fundamentals for corn, wheat and soybeans remain supportive for prices.
US pod-setting soy and filling corn will receive some rainfall at midweek but more is needed soon and this week's rain will miss some of the driest crop areas, an agricultural meteorologist said.
Scouts on annual tour found corn yield potential in Nebraska was nearly 3 percent below last year due to a combination of cool temperatures shortly after planting, scorching heat in July, late planting and some wind damage.
The Pro Farmer annual crop tour pegged 2011 corn yield in Nebraska at 153.70 bushels per acre, below its forecast of 158.29 bushels in 2010 but above the three-year average of 152.98 bushels per acre.
The US Department of Agriculture (USDA) on Monday reported a decline in condition ratings for US corn and soybeans. The drop in ratings for corn was more than traders had expected.
The wheat market is being supported by outlooks for waning supplies of top quality milling wheat.
Harsh weather in the US has trimmed supplies of high protein spring wheat and a drought threatens to reduce US hard red winter supplies.
Copyright Reuters, 2011
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