LONDON: Chicago wheat futures edged lower on Tuesday as investors saw Monday's price spike as overdone, but lingering supply worries over dry weather across the US grain belt kept the market close to an 11-month high.
Corn futures also fell back, after posting their biggest rally in three weeks in the previous session, as China's rejection of more US corn pressured prices.
"We're seeing a correction in wheat after yesterday's big increase," said Michaela Kuhl, a commodities analyst at Commerzbank in Frankfurt.
Chicago Board Of Trade May wheat fell 0.8 percent to $7.09 a bushel by 1200 GMT after rallying 3 percent on Monday. The front-month contract last week climbed to an 11-month high of $7.23-1/2 a bushel.
The condition of wheat plants in the US Plains worsened in the past week due to parched soils, with little relief in sight as the crop emerges from dormancy.
The US National Agricultural Statistics Service said in a weekly report that wheat inKansas, the largest producer of the grain, was rated 33 percent good to excellent as of March 23, down from 34 percent a week earlier.
Milling wheat futures in Paris were also slightly lower, with May off 0.2 percent at 213.25 euros ($290) a tonne.
"If it does stay dry in the US Plains, certainly we will see some support for wheat," said Paul Deane, agricultural commodity strategist at ANZ in Melbourne.
Kuhl, from Commerzbank, said any escalation in the standoff between major grainsexporters Russia and Ukraine could also drive prices higher on worries that supplies could be disrupted.
May CBOT corn was down 0.5 percent at $4.87-1/2 a bushel, having gained more than 2 percent in the previous session, while May soybeans were little changed at $14.24-1/4 a bushel.
On Tuesday, corn came under pressure after China's quality watchdog turned away 21,800 tonnes of US corn after detecting an unapproved genetically modified corn strain.
China has now rejected 908,800 tonnes of corn from the United States, the world's largest exporter, since November. Kuhl said the move dimmed the prospects for US corn exports.
Analysts say a slowdown in domestic demand and ample supplies from the domestic harvest last year are also behind China's reduction in corn imports.
In the soybean market, the strong pace of US exports continued to underpin prices. -Reuters