Wheat hits 2-week low, soy pauses after weather rally

PARIS/SINGAPORE: Chicago wheat slipped to a two-week low on Wednesday, pressured by high world supplies and forecasts for some rain relief for parched crops in the US Plains.

Soybean prices inched down, as investors assessed weather forecasts pointing to rain next week in Argentina, but stayed close to their highest in nearly seven months on concerns that drought will shrink the Argentine harvest.

The Chicago Board of Trade's most-active wheat contract was down 0.1 percent at $4.49 a bushel by 1220 GMT.

It earlier fell to $4.45-1/2, its weakest since Feb. 6 as it continued to pull away from a six-month peak of $4.67-1/4 struck last week.

"Wheat could not hold on to those earlier gains," said Phin Ziebell, an agribusiness economist at National Australia Bank. "We continue to face heavy supplies."

Weather projections pointing to some rain this week and next in the US Plains also eased concern about damage to hard red winter (HRW) wheat crops.

"The wheat prices trend reversed yesterday in Chicago (...) on the back of more precipitation than initially awaited, especially in the eastern parts of the Great Plains where the hydric deficit is the strongest," consultancy Agritel said in a note.

An import tender being held by Egypt on Wednesday was also expected to underline the dominance of Black Sea origins on export markets, although at rising prices.

CBOT soybeans ticked down a quarter of a cent to $10.26-1/4 a bushel after climbing to their highest in nearly seven months at $10.39 a bushel on Tuesday. Corn inched up 0.4 percent to $3.67 a bushel.

Some updated weather outlooks projected heavier rain in the latter part of next week in the Pampas grain belt.

However, severe drought in Argentina has prompted traders and analysts to slash harvest estimates, fuelling projections that export business could shift to the United States from South America.

Argentine farm consultancy Agripac cut its forecast for soybean production by about 18 percent from the start of the season to 47 million tonnes and its corn crop estimate by 12 percent to 37 million tonnes.

Still, Brazil is on track for a record crop.

The country's 2017/18 soybean crop is expected to reach 115.6 million tonnes, 1.2 percent above last year's all-time high of 114.2 million tonnes, according to an updated forecast on Monday from consultancy Safras & Mercado.