US wheat falls on rain f'cast, corn snaps 7-day rally
Soybeans also dipped, tracking the weakness in corn and wheat values, although the market is being supported by dry weather hurting crops in the United States and China during the crucial pod setting stage.
"The latest weather reports suggest some of the driest US hard red winter wheat regions will get periodic rainfall over the next 10 days," said Luke Mathews, commodities strategist at CBA in Sydney in a note.
"Forecast totals are not expected to be large, but any improvement in soil moisture will be welcome ahead of the upcoming autumn planting period."
Chicago Board of Trade benchmark December wheat fell 1.2 percent to $7.85-1/2 a bushel by 0242 GMT. November soy lost 0.4 percent to $14.40-3/4 a bushel, while December corn fell 0.6 percent to $7.65-1/4 a bushel.
There is bearish influence on the wheat market stemming from Australia where the crop received much-needed rain in the past few days, which should boost yields as the crop approaches the flowering stage.
The country, one of the world's leading wheat exporters, is hoping for an above average crop of around 24 million tonnes.
New-crop corn fell after hitting a contract high in the previous session as the market expects demand rationing following a more than 10 percent jump in prices this month.
"There is no doubt that high prices are having effect on US corn exports and there is no doubt that it is having an effect on wheat-corn substitution," said Adam Davis, a senior analyst at Merricks Capital in Melbourne.
"It will ration feed and exports first and if it is not enough then the price has to go higher to ration ethanol demand."
US corn and soybean ratings dropped more than expected, the second straight week of declines, as crops withered in hot and dry conditions around much of the Midwest.
The US Agriculture Department's weekly crop progress report issued after the market closed on Monday showed that the corn was rated 54 percent good to excellent as of Aug. 28, down 3 percentage points from a week earlier.
Analysts had expected the USDA to rate the corn crop 56 percent good to excellent, based on the average of estimates given by nine market watchers.
In addition to harsh weather in the United States, soybean values were underpinned by dryness in China which could curb yields, forcing the world's biggest importer to seek more from the international market.
"It seems like soybean growing areas in China have been too dry in the last two weeks and it is pod filling stage," said Davis. "I would expect some potential downgrades in yield expectations."
US soybeans were rated 57 percent good to excellent, below the average analyst forecast of 58 percent. The 10-year soybean average for late August is 57 percent good to excellent and USDA rated the crop 64 percent good to excellent a year ago.
Copyright Reuters, 2011