CHICAGO: US wheat futures were down more than 1 percent midday trade on Thursday, extending sharp losses that stemmed from the US government raising its supply forecast for the grain.
Corn futures also fell as the US government confirmed the sale of 900,000 tonnes of US corn to China, that country's second largest purchase of US corn in one day.
Traders had rallied corn prices the 40-cent daily limit on Tuesday amid rumors of the purchase. So with the sale priced into the market, the trading credo "buy the rumor, sell the news" held true.
There was also pressure on corn from Wednesday's US Department of Agriculture monthly supply-demand data that raised ending stocks nearly 29 percent from a month ago and reduced exports by 50 million bushels.
"There was nothing supportive in yesterday's USDA numbers so there is a little bit of a hangover from that here today," said Karl Setzer, analyst with MaxYield Cooperative.
A firm dollar weighed on all US commodities. Gold and crude oil markets sagged after the European Central Bank warned that write-downs on government debt could damage the region's banking system.
At 12:37 p.m. CDT (1737 GMT), Chicago Board of Trade December wheat was down 6-3/4 cents at $6.20 a bushel and CBOT December corn was down 3-1/2 cents at $6.37-1/4 a bushel.
CBOT November soybeans gained 14-3/4 cents to $12.54-1/4 a bushel on soybean/corn spreading.
Soybeans fluctuated between positive and negative territory several times during the session. Weak crude oil and the firm dollar pressured prices along with the drop in corn but the USDA's cut to ending stocks boosted prices.
Wheat's free fall was sparked Wednesday morning when the USDA boosted its domestic wheat stocks outlook by 10 percent and raised its world supply view by 4 percent in its monthly crop report.
"US and world wheat supplies are comfortable and are not supportive for high prices," Luke Mathews, a commodity strategist at Commonwealth Bank of Australia said in a report. "Global wheat production was revised higher and use revised lower."
USDA's confirmation on Thursday of the corn sale China came one day after China said it was buying 1.5 million tonnes of the grain. There was an additional 292,110 tonnes of U.S corn sold to unknown destinations, USDA said.
"The China sale was in the market," said Joe Bedore, CBOT floor manager for trade house Intl FC Stone.
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