US wheat and corn pared early gains on Monday, under pressure after Chinese media reported abundant stock levels meant that Beijing would win the war on inflation and uncertainty ahead of this week's US planting report.
The Chicago Board of Trade's most active wheat contract rose 0.2 percent to $7.34-3/4 a bushel by 0430 GMT, off a high of $7.39-3/4 struck before retreating with other commodities on a front page editorial in the People's Daily. The comment cited a number of factors as favourable to slowing the upward momentum of consumer prices, including an oversupply of industrial products, abundant grain stocks and large foreign currency reserves.
"Taken together with the uncertainty about the planting reports, there is not much appetite for risk. Other commodities are falling too and there is every reason to trim positions," said an Australian grains trader. The US government will unveil on Thursday its first survey-based estimates for major crop seedlings in the United States this year, with corn and soybean acreage data in the spotlight.
"People are going to be focusing on the whole picture, whether there'll be an additional 10 million acres of crops," analyst Dan Basse of AgResource Co in Chicago said, referring to the USDA's February projections at its annual conference.
"There could be a surprise this Thursday because seedings might not be that robust. Farmers are not as excited as they were in 2007," he said, alluding to a record year of corn-planted acreage in the United States. CBOT corn rose 0.1 percent to $6.90, having hit $6.94-3/4. Soybeans fell 0.2 percent to $13.55.
Technically soy was seen positive in the longer term, with a rise to $15.90-1/2 per bushel over the next three months, Reuters analyst Wang Tao said. He said the market was riding a powerful upwards wave that may eventually push the price to $17.12, the 161.8 percent Fibonacci projection level.
Only a fall below a pivotal support at $12.70 could temporarily invalidate the bullish outlook, with a bearish target to be established at $11.78. On the fundamental side, the United States reported its sixth-largest single-day corn sale on Friday, at 1.25 million tonnes, with China believed to be the buyer.
Rain in Argentina delayed harvesting, but should dry up by next week. Dry weather was forecast for northern Brazil, which would boost the harvest, but wet weather is on the cards for southern Brazil. Dry weather continued to stress the developing hard red winter wheat crop in the western and southern Plains, with no relief in sight from the dryness.
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