The following is an article from Bloomberg:
Wheat futures fell the most in more than three weeks as the highest U.S. price since 2008 discouraged purchases, including from importers and makers of livestock feed who may use more corn.
Unusually hot, dry weather that seared crops in Russia, Ukraine and western Europe fueled a 38 percent rally in wheat prices last month. U.S. wheat is trading at the highest premium over corn since April 2008 at export terminals in New Orleans, government data show. Egypt, the world’s top importer, bypassed U.S. grain on July 31 to buy 180,000 metric tons from Russia.
“Wheat is overpriced” in the U.S. relative to supplies from other countries and competing feed grains, said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC in Chicago. “The market has priced in all the crop production problems in the Black Sea region.” U.S. exports “are not competitive” based on Egypt’s purchase, he said.
Wheat futures for September delivery dropped 13.25 cents, or 1.9 percent, to close at $6.80 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest decline since July 9. Yesterday, the price touched $7.1125, the highest level since September 2008.
On the Kansas City Board of Trade, December wheat futures fell 15.25 cents, or 2.1 percent, to close at $7.0175 a bushel at 1:15 p.m., the biggest drop for the most-active contract since June 29. Yesterday, the price touched $7.3925, the highest level since September 2008.
Corn fell for second straight session on speculation that a rally to a six-month high will slow investment demand for the biggest U.S. crop.
The open interest in corn futures jumped to a two-year high of 1.247 million contracts yesterday. Hedge funds and other large speculators increased bets on higher corn prices to 193,448 futures and options contracts in the week ended July 27, up from 13,045 four weeks earlier.
“People are nervous the buying may have been at least temporarily exhausted,” said Roy Huckabay, the executive vice president of the Linn Group, a commodity trading adviser in Chicago. “We will see scaled-down buying” from livestock producers, ethanol manufacturers and exporters, Huckabay said.
Corn futures for December delivery slipped 0.5 cents, or 0.1 percent, to close at $4.04 a bushel in Chicago. Yesterday, the most-active contract touched $4.18, the highest price since Jan. 12.
Wheat is the fourth-biggest U.S. crop, valued at $10.6 billion in 2009, behind corn, soybeans and hay, government data show.