Wheat slipped from a 10-month high on speculation that rising prices, poised for the biggest monthly increase in more than three years, will curb demand and as technical analysis signaled the rally may be excessive.
Wheat for May delivery fell 0.9 percent to $7.0925 a bushel on the Chicago Board of Trade by 5:43 a.m. Prices reached $7.185 yesterday, the highest since May 13. Futures rose 18 percent in March, set for the biggest monthly gain since July 2010.
The grain rose 30 percent through yesterday from a Jan. 29 low close of $5.515 amid shipping delays in Canada, tension in Ukraine and worsening crop conditions in the U.S., the world’s biggest shipper. Wheat’s 14-day relative strength index rose to 73.3 yesterday, the highest since July 2012, with a value above 70 considered by analysts to indicate an overbought situation.
“The market thinks that at these levels there’s a fair bit priced in for any weather concerns, in the U.S. primarily,” Paul Deane, an analyst at Australia & New Zealand Banking Group Ltd., said by phone from Melbourne today. “There’s a reasonable risk that it consolidates near-term.”
Milling wheat for November delivery traded on NYSE Liffe in Paris rose 0.2 percent to 206.25 euros ($283.50) a metric ton. The contract for May delivery fell 0.1 percent.
About two-thirds of the wheat in the Southern Plains will remain dry for the rest of March, increasing stress on winter crops as they emerge from dormancy, Commodity Weather Group LLC said yesterday. Crop conditions deteriorated in Kansas and Texas in the week ended March 16 on cold, dry weather, according to the U.S. Department of Agriculture.
“Conditions are still particularly dry for most of the big wheat exporters, be it in the Great Plains of the U.S., in Western Australia or in Ukraine,” Paris-based farm adviser Agritel wrote in a market report.
Corn for May delivery fell 0.9 percent to $4.835 a bushel. Soybeans rose 0.2 percent to $14.335 a bushel.