US wheat falls for 2nd day on supply; corn, soy steady

SINGAPORE: US wheat futures slid around half a percent on Thursday, falling for a second straight day as the market was weighed down by higher supplies in Canada and an improved weather outlook in Australia.

Corn and soybeans were little changed after declining in the previous session as investors were cautious ahead of the US Department of Agriculture's supply-demand report on Monday, which will update the agency's crop forecasts.

"The market is in a holding pattern prior to the USDA report," said Adam Davis, a senior analyst at Merricks Capital in Melbourne.

"For wheat, Canadian stocks were a little bit higher than the trade had expected and Australia is forecast to get some rains next week, that will certainly stop yields from declining."

Chicago Board of Trade benchmark December wheat fell 0.3 percent to $7.49-1/4 a bushel by 0312 GMT, losing more ground following a drop of more than 1 percent on Wednesday.

December corn gained half a cent to $7.48-1/2 a bushel, after falling around 1 percent in the last session, while November soy was up 1 cent at $14.21-3/4 a bushel.

Canada's stockpile of wheat dropped by a smaller-than-projected 8.2 percent from a year ago as the weather-shortened 2010 crop was slightly larger than previously thought, Statistics Canada reported on Wednesday.

Spring flooding followed by unfavorable growing weather last summer dragged down crop production in western Canada, resulting in smaller stocks at the end of the season. But crops appeared to have fared better than previously thought.

In Australia, typically the world's fourth largest exporter, widespread rainfall is forecast in northern New South Wales and southern Queensland at the weekend, which is expected to benefit the high-protein crop produced in the region.

The nation is set to reap a higher quality harvest in 2011/12 than the previous season, although yields will be lower, according to analysts polled by Reuters last week.

On average, 13 analysts, trading firms and government agencies, expect Australia's wheat production at around 24 million tonnes in the marketing year to Sept 2012, as the harvest cranks up in November.

US wheat futures were also pressured by intense competition form the Black Sea region.

Egypt, the world's largest wheat importer, on Wednesday bought 300,000 tonnes of Russian and Kazakh wheat at a tender in which no US wheat was offered.

Egypt has bought wheat supplies for shipment into late November, close to the arrival of fresh new-crop supplies from Australia that will compete for business with US wheat.

US corn and soybean condition ratings declined in the USDA's latest weekly report, a factor that helped lift values in early Globex trade on Wednesday.

But it did not help spark a rally on the CBOT grain market, which is focused on the USDA report next week.

Copyright Reuters, 2011