U.S. spring wheat September futures are down about 39 cents a bushel or 4.8 percent at mid morning Thursday after touching a new four-year high a day earlier. Other wheat contracts are also lower, as is wheat, but canola is up a little and soybeans are about steady.
“I’m surprised by the extent of the (wheat) rally and the market has perhaps got a little bit overextended,” said Phin Ziebel, agribusiness economist at National Australia Bank, speaking to Reuters.
But despite signs of profit-taking by investors and selling by farmers, traders said weather forecasts had put a floor under prices and could spark further gains.
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Much of the northern Plains spring wheat belt is forecast to see temperatures in the mid-to-high 30s C in the week ahead, with limited rainfall adding strain on crops.
“They require particularly large quantities of water at this stage,” Commerzbank analysts said in a note. “
A further deterioration of plant conditions cannot be ruled out.”
In a weekly report released after the market close on Wednesday, the U.S. Department of Agriculture (USDA) estimated that 37 percent of spring wheat was in good or excellent condition, down from 40 percent a week earlier and below an average trade estimate of 38 percent.
