Wheat up, on track for biggest weekly rise since May
Corn futures dipped, losing more ground as the market remains volatile as the crop in the United States, the world's top exporter, goes through crucial yield-determining phase.
"The price action in wheat has been certainly of investment flows coming back to the market," said Paul Deane, agricultural commodity strategist at ANZ.
"Wheat was trading at a deep discount to corn and it was pretty ripe for the specs to move in."
US wheat has climbed around 9 percent this week, its second straight weekly rise and biggest gain since the week ended May 22. Actively-traded December corn has gained 6 percent this week, also up for a second straight week, with concerns over hot weather hampering US crop development.
On Friday, Chicago Board of Trade December corn fell 0.2 percent to $6.77 a bushel by 0345 GMT, while September wheat was up 0.4 percent to $7.10 a bushel. November soy contract fell 0.1 percent to $13.82 a bushel.
A heatwave forecast to hit the US Midwest next week is expected to stress developing corn throughout the day and night, providing no relief for a crop that needs a break when the sun sets to realize its full potential.
But the heat should ease by July 23 or 24, forecasting models showed, not persist into the following week as indicated earlier.
The wheat market is awaiting result of Egypt's wheat tender. The General Authority for Supply Commodities, the country's main wheat buying agency on Thursday set a tender to buy an unspecified amount of wheat from global suppliers.
Russia has increased its forecast for this year's grain crop and confirmed it sees no need to restrict exports, which are picking up following the lifting of an export ban at the start of this month.
Russia's grain crop may reach 90 million tonnes this year, up from an official estimate of 85 million tonnes and from last year's 61 million tonnes, First Deputy Prime Minister Viktor Zubkov told a cabinet meeting.
The country has aggressively undercut rivals to quickly re-establish itself in global wheat exports markets after an absence of almost a year but key buyers such as Egypt are likely to look to spread their supply risks once the price gap narrows.
The dollar held its breath in thin Asian trade on Friday after Standard and Poor's warned there was a one-in-two chance it could cut the US credit ratings if no deal was reached on raising the government's debt ceiling. The dollar index was down 0.2 percent.
Typically, a weaker dollar is bullish for US commodities, making them cheaper for overseas buyers holding other currencies such a euro or a yen.
US Federal Reserve Chairman Ben Bernanke dampened hopes on additional stimulus in the near term, shaving off some bullish sentiment in commodities overall.
Commodity funds were net sellers of an estimated 4,000 contracts of Chicago Board of Trade corn futures on Thursday, trade sources said.
Copyright Reuters, 2011