Wheat prices fall back

Wheat prices slipped back on Friday as the market suffered a downward correction following this week's surge to a three-month high, while corn held steady due to strong US exports. Dealers said the wheat market remained underpinned, however, by diminishing crop prospects in northern Europe and parts of the US driven by prolonged dry weather.
"We are taking a breather, but the weather is not getting any better. Grain farmers are getting more and more depressed by the day," said a wheat trader in Paris. July wheat on the Chicago Board of Trade fell 2.3 percent to $7.93-/12 a bushel by 1152 GMT. The contract had peaked at $8.34-1/2 on Thursday, a three-month high for the front month.
Some dealers also suggested that improved prospects in the Black Sea region and North Africa might help offset losses elsewhere. "Weather issues continue to drive the market, as continued dry weather in key north European producing regions has analysts and traders trimming crop estimates," UK merchant Gleadell Agriculture said in a market note on Friday.
"However, with crop prospects in eastern Europe and the Black Sea regions remaining favourable, and key importers projecting increasing crops and lower imports for 2011/12, the market could open to profit-taking at some stage - when or if it rains," the report added.
EU WHEAT EXPORTS DIP Export sales of US wheat last week jumped to 798,900 tonnes, 672,200 tonnes of that for shipment in the next marketing year, which begins June 1, USDA data showed. The European Union, however, granted export licences for only 173,000 tonnes of soft wheat, the lowest level in about three months.
"The higher price level for Liffe (French) wheat has evidently prompted wheat buyers to switch to other suppliers such as the USA.," Commerzbank said in a market note. November milling wheat in Paris fell 2.5 percent to 238.00 euros a tonne. Corn prices were holding steady, with July unchanged at $7.48-1/4 a bushel. The market was supported by a rise in US export sales last week to a seven-week high. "We did see demand return quite significantly as US export sales were particularly strong, and what that signals to us is that significant pent-up demand remains in the global feed grain market," said Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia. "Declines in prices that we saw in the first couple of weeks of May have uncovered that demand."
Excessive wet weather and flooding in the eastern US Midwest is also delaying corn and soybean plantings. From Saturday through the middle of next week, the eastern corn belt is expected to see up to 2.5 inches of rain. CBOT soybean prices were slightly lower with July off 0.4 percent at $13.74-1/2.