U.S. wheat and corn futures fell on Wednesday on a mix of chart-based selling and positioning ahead of a key U.S. government crop report on Friday, traders said. Ample world wheat supplies pressured Chicago wheat to a one-week low, and the benchmark May contract fell below chart support at its 50- and 100-day moving averages, both near $6.53 a bushel.
Soybeans, underpinned by damage to South American crops, touched a five-month high in early trading before giving up gains, while corn slid to a two-week low.
"Looking at the gains we've had in the last couple of weeks, traders are reluctant to push above resistance," said Arlan Suderman, market analyst at Farm Futures magazine. "Traders are saying, 'Let's consolidate ahead of Friday's report and then see where USDA is at.' "
Equity markets and crude oil were stronger even as investors awaited the outcome of the Greek debt restructuring deal and fretted about a weaker outlook for the global economy.
Chicago Board of Trade May wheat fell 2.4 percent, or 15-1/2 cents, to $6.42-1/4 a bushel as of 12:09 p.m. CST (1809 GMT). Wheat fell over 2 percent in the previous session on concerns about the global economy. Some analysts believe the USDA will trim its estimate of 2011/12 U.S. and world wheat stocks in its Friday report to 212.6 million tonnes, from its February forecast of 213.1 million tonnes; however world wheat supplies still look plentiful.
Others are not so sure the report will be bullish, especially in its 2012/13 U.S. corn and wheat ending stocks, said Jason Roose, commodity analyst and vice president of Iowa-based U.S. Commodities.
"They're afraid of the crop report coming out. For the last few months, we really haven't had a lot of (production) problems in the world grain market, besides South America." China's cut in its forecasted growth rate on Monday has also raised lingering concerns about the economic outlook in the world's biggest soybean buyer, Roose said.
Chicago May corn dipped 2 percent, or 13 cents, to $6.41 per bushel as sellers followed through from a 1 percent fall on Tuesday. On Monday, May corn nearly reached a two-month high. China's northeast province of Heilongjiang, the country's top corn and soy grower, aims to raise total grains output by 8 percent in 2012 and will expand its corn acreage by paring back on land for soy, a local agriculture official said.
Chicago Board of Trade May soybeans slipped 0.4 percent, or 5-1/2 cents, to $13.29-3/4 per bushel. The market is expecting the USDA to lift its forecast for U.S. soybean export demand as smaller South American crops transfer demand to the United States. Traders and analysts also predict a reduction in drought-hit Brazil's soybean output. Hamburg-based oilseeds analyst Oil World cut its forecast of Brazil's 2012 soybean crop by 1.5 million tonnes to 68 million tonnes, a day after two industry groups cut their own forecasts.