U.S. grain and soy review: Wheat stumbles on rain potential

U.S. wheat futures stumbled Wednesday, backpedaling from initial advances on improved weather outlooks for winter wheat crops and sluggish export demand.

Weather forecasts calling for showers to reach some parched areas of the hard red winter wheat belt were well received by the market, raising expectations that a change in weather trends for the area could improve struggling crop conditions, said Shawn McCambridge, senior grains analyst with Prudential Bache.

Wheat for May delivery, the most actively traded contract, ended down 6 3/4 cents, or 1.7%, to $7.52 3/4 a bushel at the Chicago Board of Trade.

The potential for rain in parts of Kansas and Nebraska allowed the market to shrug off some light export business from Jordan, Syria and Iraq that popped up overnight, said Terry Reilly, analyst with Citigroup.

The market was focused on weather, led by the Kansas City hard red winter wheat contract, and despite the rains expected to miss the driest areas, it provided enough jitters to encourage traders to reduce some risk exposure, Reilly said.

There is an increasing threat of rain in northern Kansas into Nebraska and northeast Colorado Thursday, said Mike Palmerino, meteorologist with Telvent DTN. The driest areas of Texas and Oklahoma will miss any significant rain opportunities in the next week, but if a wetter pattern for the central U.S. is evolving, the trade is showing some caution, he said.

The wheat market also experienced weakness from concerns prices need to move to levels that generate demand for a market amply stocked with inventories, McCambridge said. Otherwise, traders were said to covering some long wheat/short corn spreads, a feat that exhausted early buying.

U.S. corn futures ended higher as the market rebounded from sharp losses Tuesday as supply fears continued to support corn, as did stronger crude oil and worries about wet weather possibly causing a sluggish start to the U.S. planting season.

U.S. soybean futures ended higher, stabilizing after dropping nearly 6% since the start of April, finding value amid tight supplies and solid demand.

Corn for May delivery ended up 3 cents, or 0.4%, at $7.55 1/2 a bushel at CBOT. Soybeans for May delivery rose 3 3/4 cent, or 0.3%, to $13.33 1/2 a bushel.

Other markets

Soy-product futures ended lower, retreating with soybeans. Soyoil futures drew pressure from sharp declines in crude oil futures, while soymeal stumbled on slumping global meal demand, analysts said. CBOT May soymeal ended 2.1% lower at $349.70/short ton while May soyoil slides 0.95c or 1.6% at 58.82c/pound.

Ethanol futures finished nearly flat Wednesday, mimicking the two side price action in corn and crude oil futures. The May contract dropped 0.08% to $2.658 per gallon. Oats for May delivery dropped 1.1% to $3.86 3/4 a bushel. CBOT May rice finishes up 1.9% at $13.62 1/2 per hundredweight.

Hard red winter wheat for May delivery lost 9 cents, or 1%, to $8.85 a bushel at the Kansas City Board of Trade. Hard red spring wheat for May delivery fell 7 3/4 cents, or 0.9%, to $9.04 at the Minneapolis Grain Exchange.