U.S. wheat futures are expected to start mixed Wednesday as spillover pressure from a setback in the corn market weighs on prices.
Traders predict soft red winter wheat for September delivery, the most actively traded contract, will open down 2 cents to 3 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract lost 1 1/2 cents, or 0.2%, to $6.92 1/2 a bushel.
Wheat prices are taking their direction from corn because both grains are used for livestock feed. Supply and demand factors are largely known for wheat, inhibiting the market from trading independently from corn, traders said.
"Wheat has little news to digest," said Duane Lowry, analyst for Early Market News, an agricultural advisory firm.
Corn prices are expected to retreat in early dealings, dragging down wheat, as weather has improved for the U.S. corn crop. Strength in the U.S. dollar should add pressure to the markets, as it makes U.S. grains less attractive to foreign buyers, traders said.
Wheat traders are concerned about foreign demand as the U.S. faces increased competition for export business from Russia. Syria's state grains buyer has purchased 127,000 metric tons of milling wheat from Russia and Romania in a tender and none from the U.S., traders said Wednesday. Egypt, often the world's top wheat importer, on Tuesday bought 120,000 tons of Russian wheat, snubbing the U.S.
Competition with Russia has increased since the government resumed grain exports this month after banning them for nearly a year following a devastating drought. Russia is known for selling low-cost wheat on the world market and undercutting prices from the U.S.
In other news, the annual hard red spring wheat tour in North Dakota starts its second day of field surveys Wednesday. The tour's first day resulted in an average yield estimate of 39.5 bushels per acre for spring wheat, compared with 43.1 bushels per acre after the first day of surveys a year ago.