U.S. traders have watched in disappointment as Egypt, the world's largest wheat importer, has turned mostly to Russia for purchases in recent weeks. Other buyers have also bypassed the U.S., as a surge in the country's wheat prices has made exports less competitive.
Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, said last weekend that it bought a total of 365,000 tons of wheat--about two-thirds of it from Russia, and the rest from Ukraine and Romania. That followed other purchases of Russian wheat last month.
Lower U.S. corn futures also pressured wheat prices Wednesday, because cheaper corn can reduce demand for wheat as a substitute in animal feed. Soybean prices also declined after hitting a new all-time high Tuesday, as the grain-and-soy complex saw profit-taking.
"If corn is down, then the whole thing is going to be down," said Sid Love, an analyst at Kropf & Love Consulting, an Overland Park, Kan., agricultural-advisory firm.
Wheat prices also were pressured by forecasts for rain this week in the southern Great Plains. Rain in Kansas, Nebraska and Oklahoma would help replenish soil moisture before farmers start planting wheat this month for harvest next spring. The U.S. is the world's largest wheat exporter.
Corn futures were pressured by harvest-season hedging, as elevators that buy physical grain also sell futures as a hedge. Soybeans were pressured by weaker cash markets as physical supplies become cheaper relative to futures due to the coming soy harvest.
Thinly traded CBOT September corn fell 17 1/4 cents, or 2.1%, to $7.89 3/4 a bushel. December corn fell 14 1/4 cents, or 1.8%, to $7.90 3/4 a bushel.
Thinly traded September soybeans fell 23 cents, or 1.3%, to $17.48 a bushel. November soybeans fell 20 3/4 cents, or 1.2%, to $17.47 1/2 a bushel.
The worst U.S. drought in decades has had little impact on U.S. wheat crops, even as it has decimated the nation's corn crop this year and greatly reduced the soy crop's potential harvest. The crop of so-called spring wheat growing in the upper Midwest, which has now mostly been harvested, lay largely out of reach of the hot, dry weather that intensified this summer in areas farther south, from Kansas to Indiana.
Wheat futures surged to a four-year closing high in July as the drought triggered record corn prices. But wheat has fallen 10.3% from that high as corn prices have leveled off and the spring-wheat harvest in the U.S. surpassed expectations.
In the Black Sea region, drought conditions have damaged wheat crops. Some analysts speculate that Russia, one of the world's largest wheat exporters, will have to move to limit exports later this year to ensure sufficient domestic supplies, even though Russia last week said it has no plans to restrict grain exports.
