April 28, 2011

CBOT wheat tumbles on improved weather

CBOT wheat futures tumbled on Wednesday (Apr 27) on a combination of investors reducing risk exposure in the market and weather conditions that should ease stress to crops in the US and Europe.

Wheat for July delivery ended down 35 cents, or 4.1%, at US$8.12 a bushel at CBOT. Broad based selling was consistent across the grain complex at CBOT, reflective of investors reducing risk in the absence of a fundamental change in the market, an analyst said.

Prices felt additional pressure from beneficial rains in dry parts of the US Plains and Europe. The rains are expected to stabilise deteriorating crop conditions and improve production prospects.

Rainfall and cooler temperatures may help crop conditions through Kansas and parts of Oklahoma, according to private weather firm Telvent DTN. Western Germany, northern France, and England may see cooler temperatures and showers in the driest areas, the firm said.

Wheat crops in central Europe, Germany were not in the same critical situation that wheat in US plains are in, but the rains nonetheless are beneficial to developing crops, analysts said.

Traders are assessing the condition of the crops in the Northern Hemisphere ahead of the upcoming harvest. Wheat futures soared last year when harsh weather, including a historic drought in Russia, slashed output and reached two-and-a-half-year highs in February on a surge in demand. Prices have since pulled back over 11%.