Wheat falls more than 1pc despite threat to US crops

HAMBURG: US wheat futures fell on Tuesday as buying interest weakened after a sustained rally that saw prices hit their highest in almost eight months.

Soybeans also dropped, although concerns over Argentina's crop kept prices close to the nearly 20-month highs seen in the past week. Corn slipped, following the weakness in the two other sectors.

"Markets are taking a pause today following the recent sharp rises although the background concern about dryness in the US Plains grain belts and Argentina has not changed," said Matt Ammermann, commodity risk manager with INTL FCStone.

"There had been a considerable amount of short-covering last week as prices rose but that money flow does not seem to be supporting wheat and soybeans today."

Most-active May wheat on the Chicago Board of Trade fell 1.1 percent to $5.03-1/2 a bushel by 1136 GMT. Wheat hit its highest since July 2017 last week and rose more than 1 percent on Monday on concern dryness would damage crops in the US Plains.

May soybeans slipped 0.09 percent to $10.76-1/2 a bushel, after rising 0.5 percent on Monday. Soybeans hit their highest since July 2016 in the last week on worry that dryness will cut Argentina's crop.

May corn slid 0.1 percent to $3.86-3/4 a bushel, having risen 0.5 percent on Monday.

Wheat's fall comes ahead of the US Department of Agriculture (USDA) world supply and demand report due this week, in which analysts expect slightly larger US ending stocks of wheat.

"When wheat prices rise this generates a rapid concern about whether US export competitiveness has been damaged, which is reflected in prices," Ammermann said.

"The dryness in Argentina stressing the country's soybean crop has also not changed. But it seems a lot of the fear about crop damage there has now been traded into prices."

"Estimates of Argentina's soybean crop were cut to below 50 million tonnes, then to the mid 40 million tonnes area and then to the low 40 million tonne range."

A poor showing in Argentina is expected to be confirmed in the USDA report on Thursday.

Some of the losses there, however, are expected to be offset by a big crop in Brazil, further pressuring prices that are also threatened by the risk that international trade tensions could disrupt China's imports of US soybeans.

"Corn has been something of a passenger to wheat and soybeans in past days and is following the others today," Ammermann said. "US corn remains the cheapest in world export markets."