Wheat fell for a third day in Chicago and dropped in Paris on speculation that a rally may have carried prices too high. Corn and soybeans gained. September-delivery wheat slid 0.6 percent to $5.8625 a bushel on the Chicago Board of Trade at 1 p.m. Paris time. The most-active contract has climbed 26 percent in the past month as drought in Russia and parts of Europe and excessive rain in Canada damaged crops. Wheat’s relative strength index, a gauge used by some investors to judge whether prices may rise or fall, dropped below 70 for the first time since July 12. An RSI level above that level is considered by some traders as a signal that a contract is set to decline. “At this point, traders look to be taking a bit of a step back from the recent global production concern-driven rally,” Phillip Futures Pte said in an e-mailed note to investors today. Still, there remains some “upside potential” as producing countries face weather-related problems, it said. Wheat areas in northern Argentina will likely remain dry through July 28, Accuweather.com forecast yesterday. Output in the country, South America’s largest exporter, was forecast to rise to 12 million metric tons in the 2010-11 year from 9.6 million a year ago, ending two years of declines, according to a U.S. Department of Agriculture estimate on July 9. Argentine Sowing The area planted with wheat by Argentine farmers shrank to 3.2 million hectares (7.9 million acres) in the 2009-10 season, the smallest since at least 1960, the oldest data on the USDA website. “Argentina has emerged as the latest country to face potential setbacks over wheat, with adverse weather threatening its recovery from century-low plantings,” Philip Futures said. Wheat prices in the European part of Russia rose 15 percent to 4,850 rubles ($160.40) a ton by July 23 from a week ago on concern that drought may curb supply, researcher SovEcon said on its website. Russia was the third-largest grower in the 2009-10 season, according to the USDA. Milling wheat for November delivery fell 1 percent to 175.75 euros ($228.49) a ton on NYSE Liffe in Paris, dropping for a second day. Prices are “headed downward because of profit-taking after the strong upward sessions of the past weeks,” Bourges, France- based farm adviser Offre et Demande Agricole said in an e-mailed comment today. Corn Gains Corn for December delivery rose 0.4 percent to $3.795 a bushel in Chicago. The grain may average $4.25 in the three months ending March 31 as smaller crops in Europe, Russia and Ukraine boost demand for U.S. exports to Asia, Luke Chandler, executive director of agricultural market research at Rabobank Group, said in an interview yesterday. Corn yields in China’s northern Jilin province face a “relatively significant” threat if rain and low temperatures continue into the silking and pollination growth stages, especially in the lowlands in the central to east areas, according to portal Grain.gov.cn. Jilin is the nation’s largest corn grower. Silking is the stage when corn plants begin to produce grain, while pollination is the reproductive stage, when crops are most vulnerable to damage from adverse weather. November-delivery soybeans rose 0.2 percent to $9.6775 a bushel. To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net.

Source