Paris Wheat Futures Extend Drop as Traders Refocusing on Supply

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Paris wheat fell for a second day as traders refocused on excess supply after bullish bets related to weather scares in other grains spurred gains earlier last week. Futures are reversing the advance, as supplies are ample and crops "look generally O.K. everywhere," Ukrainian broker Veles-Agro said in an e-mailed report Monday. Money managers more than doubled bullish wagers on farm commodities on concerns weather would damage corn and soybean crops in South America, benefiting wheat farmers.

"Last week, funds bought massively grains-derivatives products," Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland, said in a note Monday. "This week, traders could be back to fundamentals, which remain heavy." Milling wheat for December delivery, the most-active contract, fell as much as 0.7 percent to 167.25 euros a metric ton on Euronext. That was the lowest since April 19. Futures for September were 0.8 percent lower at 160.75 euros a ton by 12:32 p.m. in Paris. In the U.S., wheat for July delivery dropped 0.7 percent to $4.7075 a bushel on the Chicago Board of Trade.

Money managers held a combined net-long position of 368,088 futures and options in 11 agricultural products in the week ended April 19, according to U.S. Commodity Futures Trading Commission data published three days later. That is up from 177,770 a week earlier, the data showed.

Wheat gained even as most of the weather scares in Argentina and Brazil threatened soybeans and corn. Wheat above $5 a bushel in Chicago would be a good chance to sell, Michael McDougall, a senior director at Societe Generale SA in New York, said by e-mail Friday. "Despite wheat values receiving support from soybeans, triggering managed-money funds to buy back short (sold) contracts, the long-term picture for wheat as of today still remains weak," the U.K. unit of Dutch grains trader Nidera said in a report on its website Friday. "Favorable rains continue to be forecasted for the U.S. (aiding both wheat and corn), and European crops continue to look in good condition."