Wheat rally pauses, corn hesitant as weather watched

PARIS/SINGAPORE: Chicago wheat futures turned lower on Monday as last week's short-covering rally faltered in the face of ample supplies, while corn was little changed as investors assessed shifting weather forecasts for spring planting.

Soybeans were also nearly flat as the oilseed market awaited a clearer picture of US planting prospects and further developments in trade negotiations between Washington and Beijing.

The most active wheat contract on the Chicago Board Of Trade was down 0.5 percent at $4.60 a bushel by 1227 GMT.

It earlier touched its highest since March 6 at $4.64 to add to a rally last week when it bounced back from its weakest in over a year.

"The market was mainly driven higher by technicals but we have large world supplies which will prevent the market from rallying," said Phin Ziebell, agribusiness economist at National Australia Bank.

A backdrop of tepid US exports, large global inventories and favourable harvest prospects in rival exporting zones like Europe and the Black Sea region has been anchoring wheat prices.

Traders said investment funds have been unwinding large bearish bets on wheat following the price lows a week ago.

The Commodity Futures Trading Commission's weekly commitments of traders report also showed that noncommercial traders, a category that includes hedge

funds, trimmed their net short position in CBOT wheat in the week to March 12.

Large speculators increased their net short position in CBOT corn and soybeans in the same week, the regulatory data released on Friday showed.

Corn inched up half a cent to $3.73-3/4 a bushel, after earlier reaching its highest since March 6 at $3.751/2. Soybeans ticked down a quarter of a cent to $9.09 a bushel.

Weather forecasts pointed to a drier week in southerly US grain belts that have faced soggy, cold conditions, which could reduce planting delays.

"Dry weather this week in the US Deep South and southern Midwest to initially reduce risks to early corn and soybean plantings and developing soft red winter wheat," Refinitiv Agriculture Research analysts said in a note.

The adverse weather had encouraged last week's strength in corn although the planting season is still in its early stages.

US soybean processing activity slowed by more than expected in February, although the crush was still the largest on record for the month, according to National Oilseed Processors Association (NOPA) data released on Friday.

The subdued start to the week on grain markets also reflected the absence of fresh developments in US-China trade talks, in which soybean shipments are a major issue.