US wheat futures pared losses after falling around 2 percent on Tuesday, while corn lost more than 1 percent, as grains came under pressure from a broad-based commodity selloff. Global share prices slipped while commodity prices tumbled from record peaks after a Goldman Sachs report advised investors to lock in profits before oil and other commodity markets reverse.
"The news flow has been relatively quiet following the US Department of Agriculture report so there hasn't been any catalyst to take things higher." Chicago Board of Trade wheat for May delivery was down 1.4 percent at $7.87 a bushel by 1126 GMT, while May corn dropped 1.1 percent to $7.68 a bushel.
"Fundamental news in the market is more or less known, there isn't any fresh data coming on stream now and all we need to do is look at the US plantings," said Abah Ofon, an analyst with Standard Chartered Bank in Singapore. Corn surged to an all-time high on Monday, gaining some 14 percent in the last 10 trading days, while wheat jumped to a one-month top as tight global supplies and strong demand buoyed the grain markets.
"We've just had a phenomenal rally in corn recently so it's not a huge surprise we're seeing that take a little bit of a rest," Macquarie's Bos said. Long-term commodity bull Goldman Sachs told its clients there was a strong chance commodity prices may reverse and recommended they take profits on what has been a hugely profitable trade.
As a result, US oil futures extended losses by more than $2 on Tuesday before reversing to edge higher. Fundamentals in the corn market remain bullish with strong demand from food and fuel sectors amid the tightest stocks since the 1930s. Traders said the corn market should remain on investors' radar as the outlook was for continued strong demand. The United States, the world's largest grain exporter, runs the risk of depleting its corn supplies before the autumn harvest unless demand wanes.
US farmers have planted 3 percent of intended corn acreage so far this year, matching their pace in 2010 and the average of the last five years but falling below analysts' expectations, the US Agriculture Department said after the market closed on Monday.
Record futures prices for corn and tight global stocks prompted farmers in southern stretches of the Corn Belt to start their planting a little bit early as many hope to boost their total corn acreage this year. But wet conditions prevented most farmers in key corn-producing states such as Illinois and Indiana from getting an early start on their planting.
In the soyabean market, harvest of South America's bumper crop and worries about a slower demand from China, the world's leading soyabean importer, continued to pressure prices. "Chinese soyabean demand has been very slow for the last three months. Cash prices in Brazil have been under pressure due to the fact that there's been very little purchasing from China," Macquarie's Bos said, adding the nearby demand for soyabeans looked bearish. Soyabeans for May delivery fell 0.6 percent to 13.60 a bushel, adding to a more than 1 percent decline in the last session.
Argentine soya crushing increased 43.9 percent in February from a year ago, to 2.02 million tonnes, due to a record 2009/10 crop, the government said in its latest monthly report. Argentina is the world's top supplier of soyaoil and soyameal and the third-biggest exporter of unprocessed beans. An official with China's state-owned trading house COFCO Co Ltd attributed a possible slowdown in soya imports to poor crushing margins.