HAMBURG (Reuters) - Chicago wheat and soybeans fell on Wednesday on pressure from the stronger dollar and tumbling outside markets, but concern about the U.S. crop supported corn, analysts said.
The dollar rose while European equities and crude oil fell on Wednesday as investors fretted about Spain’s struggling banks and indications China will shy away from stimulating its economy. [ID:nL5E8GU6HJ] <MKTS/GLOB>
“We are seeing something of a tug-of-war each day between the depressed micro economic environment and weather conditions especially in the Black Sea region and the U.S.,” said Rabobank analyst Erin FitzPatrick. “A lot of the moves today were based on the depressed macros, yesterday we saw more fundamental influence.”
Chicago Board of Trade July wheat fell 1.1 percent to $6.49-1/4 a bushel by 1204 GMT, giving up more ground after falling 3.4 percent on Tuesday.
Chicago July soybeans fell 0.8 percent to $13.75-3/4 a bushel. European benchmark wheat in Paris was also weaker, with November down 0.7 percent at 210.00 euros a metric ton.
But Chicago July corn was little changed, down a marginal 0.04 percent to $5.62-1/4 a bushel and spending part of the session in positive territory.
The U.S. dollar index .DXY, which measures the strength of the greenback against a basket of currencies, rose 0.3 percent, making dollar-priced commodities expensive for importers. Weakness in other commodities, especially crude oil and metals, also burdened.
“We have seen deterioration in crude oil values, which is indicating another bout of risk aversion that is also evident by the fact that the U.S. dollar is sharply higher,” said Luke Mathews, commodity strategist at Commonwealth Bank of Australia.
“It does appear in the grain markets that the outside markets are providing an overwhelming direction.”
Russia’s Grain Union on Wednesday gave an upbeat picture of the country’s upcoming crop and exports.
Traders were keeping a close eye on weather forecasts after wheat prices came under pressure after reports of rain in dry southern Russia since the weekend, with Russia’s state forecaster predicting more rainfall this week.
“We do have some improved weather forecasts for the U.S. this week but the longer-range forecasts are still not very positive,” FitzPatrick said.
“The U.S. weekly crop progress report on Tuesday is supportive for corn prices today but the U.S. corn crop is still looking fairly good, certainly better than this time last year, and we still have a long growing season ahead of us.”
The U.S. Department of Agriculture’s weekly crop progress report on Tuesday said that 72 percent of the crop was in good-to-excellent condition, down 5 percentage points from a week ago. Analysts polled by Reuters expected the crop’s rating to drop 2 to 4 percentage points.
U.S. corn and soybean crops now need an urgent round of rain and there are some forecasters calling for showers in the Midwest this week.
Rain is also seen in portions of the lower Midwest, providing critical relief to stressed corn crops in those areas, although more will be needed to foster development. Traders said rain was unlikely to penetrate the dry subsoils that were slowing soybean emergence.
Editing by Alison Birrane