US soy, wheat futures slip 0.5 percent on consolidation

US soy and wheat futures lost more ground on Wednesday (June 3), falling 0.5 percent on consolidation after a rally that lifted prices to an eight-month top earlier this week.

However, the grain markets, especially soy, are unlikely to drop sharply as bullish fundamentals of tight old-crop supplies support, though some analysts fear that commodity prices may have moved up too fast.

Wheat for July delivery fell 3-A¼ cents to US$6.66-A¼ a bushel, July delivery soy was down 5-A½ cents to US$12.03-1/2, and corn for July lost 2-A½ cents to US$4.47.

Soy have led the rally in Chicago grain markets, climbing 26 percent since April on the back of poor supplies from drought-stricken Argentina and surging imports from China.

More recently, the market has been supported by a delay in planting for this year's corn, spring wheat and soy crops in the US and inflows of speculative money.

Analyst Doug Whitehead said that prices would not correct too substantially unless the US dollar is seen strengthening, equity markets correct strongly and oil come down significantly.

Some analysts warned that commodities could be in for a sharp correction if high prices encourage producers to raise output in the face of fundamentals that mostly remain weak.