Chicago | Reuters – Chicago wheat futures eased on Tuesday after rising to their highest level in almost nine years, as the declining condition of the U.S. winter crop raised worries over global supply at a time of tight stocks and strong international demand.
U.S. wheat prices fell later in the session on profit taking and as talk of higher interest rates gave a boost to the U.S. dollar, traders said.
“The market is trying to test how high the price has to get in order to slow down demand,” said Don Roose, president of Iowa-based U.S. Commodities.
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U.S. oat futures also hit contract highs on Tuesday, and in Europe the Paris-based, most-traded March wheat contract touched a 13-1/2 year high of 289.00 euros per tonne.
Corn futures fell slightly, pressured by the wheat market. Soybeans gained ground after a U.S. Department of Agriculture report showed slower-than-expected harvest progress.
The most-active wheat contract on the Chicago Board Of Trade (CBOT) settled the day down 5-3/4 cents at $7.91-1/2 a bushel, after equalling a December 2012 high of $8.07 a bushel in earlier trade.
U.S. corn settled down 6 cents at $5.73 a bushel and soybeans rose 7-3/4 cents to $12.56-1/4 a bushel.
The early-session rally in wheat was given a boost by a U.S. Agriculture Department report on Monday that showed good-to-excellent ratings for the U.S. winter wheat crop fell to 45 percent – bucking analysts’ expectation for an improvement.
Meanwhile, Saudi Arabia’s main state wheat buying agency said it bought about 1.268 million metric tonnes of milling wheat in a massive deal that exceeded some traders’ expectations.
Now, traders are starting to keep a close eye on the size of the wheat harvest coming out of the Southern Hemisphere, and whether that might alleviate some supply concerns.
“We’re seeing the Australian wheat crop getting bigger and Argentina crops are large, too,” Roose said. “So there is wheat available right now in the market.”
– Additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.
