US corn and wheat futures posted their biggest drops in two months of nearly four percent on Thursday as traders locked in profits from strong monthly gains ahead of a long holiday weekend. A firm dollar, which crimped demand on the export market, as well as forecasts for rain in the US Midwest and southern Plains regions also contributed to the declines in the grains and soya markets, traders said.
"You are seeing some profit-taking going into the three-day weekend," said Jim Gerlach, president of commodity brokerage A/C Trading. "I just kind of think it caught up with the market a little bit here today." Chicago Board of Trade wheat led the decline, falling 3.9 percent, its biggest daily drop since June 30. Corn, which faced further pressure after talk of better-than-expected yield reports from the early harvest surprised the market, was down 3.8 percent."These prices are overbought," said Shawn McCambridge, grains analyst with Jefferies Bache. "We have had a good bounce off the recent low. The lack of new information coming in just has people cashing out a little bit and reducing their positions."
Some investors were putting money on the sidelines ahead of the upcoming US Labour Day holiday. The benchmark CBOT December wheat contract settled down 30-1/2 cents at $7.61 a bushel. CBOT December corn fell 29 cents to $7.38-1/2 a bushel. CBOT November new-crop soyabeans dropped 23 cents to $14.34-1/2 a bushel. CBOT wheat volume was light, coming in about 30 percent below its typical average. Soyabean volume also was thin but activity in the corn market was close to normal. The US dollar rose against a basket of currencies on Thursday as disappointing manufacturing data fanned fears of global economic deterioration and prompted a flight to safe-haven assets. A firmer dollar makes US commodities less attractive to investors looking for a hedge against inflation in addition to making US commodities less attractive to overseas buyers.
"These are prices in corn that tend to be restrictive on demand," said Greg Grow, director of agribusiness at Archer Financial Services. "Price rationing occurs and you do not even know it." Soyabean export sales fell about 10 percent in the latest week due to competition from cheaper South American supplies. Corn exports were lagging their year-ago pace.
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