U.S. wheat futures are expected to start weaker Wednesday as cooler, wetter weather is expected to ease stress on crops in the Plains region and Europe.
Traders predict soft red winter wheat for July delivery, the most-actively traded contract, will open down 14 to 17 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contact slid 16 3/4 cents, or 2%, to $8.30 1/4.
Weighing on prices are forecasts for rain in Kansas and Oklahoma, key producers of hard red winter wheat that have been too dry since last fall. Crop areas in Germany, France and England are expected to get a drink of water as well following a period of unfavorable dryness.
Traders are assessing the condition of the crops in the Northern Hemisphere ahead of the upcoming harvest. Wheat futures soared last year when harsh weather, including a historic drought in Russia, slashed output and reached 2 1/2-year highs in February on a surge in demand. Prices have since pulled back about 11%.
"Rainfall chances are improving for areas of E.U. and eastern Russia, while better rains overnight in western Kansas and eastern Colorado pressured the wheat market for the time being," said Benson Quinn Commodities, a brokerage in Minnesota.
Rainfall and cooler temperatures "may help to stabilize crop conditions through Kansas and parts of Oklahoma," although Texas remains very dry, according to private weather firm Telvent DTN. Western Germany, northern France and England may see cooler temperatures and showers in the driest areas, the firm said. It noted the weather probably won't be enough to end crop concerns in the area.
Commodities in general are shaky Wednesday ahead of the Federal Reserve's rate decision and Fed Chairman Ben Bernanke's history making news conference, analysts said. Traders are reducing risk due to uncertainty about whether Bernanke's comments will impact the U.S. dollar or other markets.
"The grains are under a little extra stress, thanks to glimpses of weather hope," INTL FCStone told clients in a note.
In other news, private exporters struck deals to sell 100,000 metric tons of hard red winter wheat, grown in Plains states like Kansas and Oklahoma, to "unknown destinations." The government will issue weekly export sales data Thursday.