Wheat, Corn, Soybeans Decline as Investors Await Outcome of Fed Meeting

Wheat and soybeans fell for a second day in Chicago as investors awaited the outcome of a U.S. Federal Reserve meeting that may affect borrowing costs and investor appetite for commodities. Corn dropped.

The central bank probably will announce few, if any, policy changes, economist Dennis Gartman said in his daily newsletter. The end of the Fed’s second round of bond-buying, known as quantitative easing or QE2, is approaching in June.

“There’s been profit-taking, while most investors are taking a wait-and-see stance to watch the outcome from the” Fed meeting, Han Sung Min, a broker at Korea Exchange Bank (004940)Futures Co., said by phone from Seoul. “Like other commodities, the grains and oilseed complex cannot be free from this policy meeting.”

Wheat for July delivery lost 16.75 cents, or 2 percent, to $8.3025 a bushel by 1:15 p.m. London time on the Chicago Board of Trade. The grain has jumped 69 percent in the past year. Milling wheat for May delivery declined 5.75 euros, or 2.3 percent, to 247.75 euros ($363.20) a metric ton on NYSE Liffe in Paris.

Wheat also may have fallen after Canada yesterday said planting increased 17 percent from a year earlier. Growers will seed 24.7 million acres with the grain, Ottawa-based Statistics Canadasaid in a report.

“StatsCanada has this year’s prospective planted acreage for canola and wheat materially higher than last year,” Gartman said. “High prices are indeed the best fertiliser for new and larger crops.”

Too Much Rain

Excessive rains in the Midwest continue to delay planting of corn, soybeans and wheat, potentially derailing farmers’ plans to boost output, while dry weather in parts of the winter- wheat growing areas continue to stress crops.

Texas, Oklahoma and southwest Kansas are likely to have “major crop losses” because of prolonged drought and episodes of hot weather, Telvent DTN Inc. said in a report yesterday. Heavy rains and storms in eastern and southern Midwest and the Delta region may bring severe flooding, derailing planting of spring wheat, corn and soybeans, it said.

“All that’s compounding to reduce production” of wheat in the U.S., Jay O’Neil, an adviser to the U.S. Grains Council, said in an interview in Singapore. “The market is watching the progress of the crop.”

As of April 24, about 40 percent of the winter-wheat crop in the U.S. was in poor to very poor condition, up from 38 percent last week, and 6 percent a year ago, the Department of Agriculture said April 25. In the spring planting areas, about 6 percent of the crop has been planted, compared with 5 percent a week earlier, and 39 percent last year, it said.

Soybeans for July delivery fell 16.25 cents, or 1.2 percent, to $13.73 a bushel in Chicago, narrowing the past year’s gain to 38 percent.

Corn for July delivery declined 8.5 cents, or 1.1 percent, to $7.6425 a bushel. The grain has more than doubled in the past year.

(Source: http://www.bloomberg.com/news/2011-04-27/wheat-corn-soybeans-decline-as-investors-await-outcome-of-fed-meeting.html)