Chicago: US wheat prices fell 1.5 per cent last Friday as late-session profit-taking more than offset support from worries that a Black Sea region drought will leave a third of Russia's land fallow until next spring.
Soybean prices jumped 1.7 per cent on brisk export demand and hot weather in the US delta that was stressing the crop in its key pod-setting stage of development. Corn advanced 1.4 per cent.
Bull numbers
"There was some profit-taking that took wheat down into the close. We had the bull numbers (in Thursday's monthly US Agriculture Department report) and the good run-up, so people were just taking it off before the weekend," said ABN Amro broker Jeff Thompson, referring to the bullish world stocks and production data released by USDA.
Recent volatility
Many traders wanted to lighten their load due to recent volatility in wheat prices, which soared to two-year highs last week before tumbling in four of the past six trading sessions.
Prices were down 3.2 per cent this week and down 16.5 per cent from last week's highs.
A devastating drought has slashed wheat production in Russia. The country, which last year was the world's No. 3 exporter, has banned grain exports through at least the end of the year, fuelling demand for wheat from the United States, Europe and elsewhere.
Drought and heat in parts of Russia and Ukraine are now expected to delay the sowing of winter grain crops, raising concerns that losses will extend to next year. Russia's winter crop sowing may drop by a third.
USDA on Thursday cut its 2010-2011 Russian wheat export forecast by 80 per cent and also scaled back for Ukraine and Kazakhstan.
The lower forecasts also follow floods in Pakistan and worries about too much rain on Canadian farms, all of which fuelled a near doubling in US wheat prices to a two-year high last week.
Pressure
US wheat prices were also pressured by spread activity, with traders selling wheat futures and buying corn after the typical $1 to $1.50 (Dh3.67 to Dh5.50) per bushel price spread between the two grains widened to more than $3 this week, traders said. The spot wheat/corn spread narrowed to $2.91 by the close on Friday.
"The spread got pushed so wide that a lot of people are willing to take profits today on the wheat side and unwind some spreads," said Dax Wedemeyer, analyst and broker with US Commodities.
