Wheat is developing into something of a two-tier market, and it is US contracts which are travelling second class.

Chicago's near-term September lot slumped 4.0% to close at $6.47 � a bushel on Wednesday, its lowest finish of the month, with Kansas and Minneapolis peers also posting 2-3% losses.

Contrast that with wheat's performance in Europe.  In Paris, the spot November lot gained 0.1% to E214.00 a tonne, while London's November feed wheat contract gained 0.4% to �147.30 a tonne.

Sure, the difference was in part down to Chicago's later close, with wheat finishing pretty much at its day low. European contracts may well play some catch up on Thursday.

But other forces were at work too.

'Nervous market' 

Some traders cited the external market conditions, which look worse in the US, where data showed new home sales falling 12.4% last month to their lowest on record. While durable goods orders rose by 0.3%, this was way below market forecasts for a 1.6% rise.

"The outside markets continue to make this market nervous," Darrell Holaday at US broker Country Futures said.

Still, while there was "good buying in the corn and soybeans on any price retreat, this has not been as evident in the wheat today".

Indeed, the grain was left to go through a series of key technical levels, blowing off a fresh array of automatic sell orders each time.

Exit of the bulls 

What appeared to worry more investors, however, was US wheat's no-show in the latest Egyptian grain tender, which favoured France and Canada instead.

Is US wheat still not wheat cheap enough, even after a fall of more than 20% in Chicago from its early-month highs? Maybe not, when funds are still throwing in the towel. 

"The basis for a higher market has waned," Randy Allen, chief executive of RWA Financial Services, said.

The "freefall" in prices "doesn't weigh in well for those looking for a turnaround in the near term," the speculators and funds who "pushed prices extremely higher, but later took a bath".

He forecast that price would fall a further $0.40 a bushel or so before "finding support".

Ever shrinking 

European prices are being helped by geography � proximity to Russia's Black Sea ports makes gives them the edge in picking up trade, such as the latest Egyptian tender. 

Furthermore, the continuing harvest-slowing rainfall, which Agrimoney.com's local UK farms can attest to, are making a disappointing crop even more so.

"Rains are slowing harvest in northern Europe and are expected to reduce yield and quality of the small grains crop," Benson Quinn Commodities said.

Furthermore, European contracts lacked the pressure,which characterised Chicago, from speculators spreading with other crops - mainly a "sell wheat, buy corn" bet.

"There is still a lot of spread trading today with a bias to buying corn and selling the other two, especially wheat," Mr Holaday said.

Disappointing yields 

Indeed, corn for September ended but 0.5 cents lower at $4.04 � a bushel.

Sure, there was talk of weakening cash prices.

"Producers are dumping a lot of old crop corn to make room for the new crop and this is pressuring basis in many areas," Mr Holaday said.

But this was offset by reports that early harvest had revealed a US crop not living up to hefty expectations.

"Yield reports remain disappointing on corn in many areas," US Commodities said, adding that yields were coming in some 5-15 bushels per acre below estimates.

China's return? 

Soybeans, meanwhile, were helped by firmer cash prices in the Midwest, and rumours of a return of buying by China, the world's top importer, whose absence from daily US export updates has been badly missed.

"Rumours China purchased one or to cargoes of soybeans overnight helped support [prices]," Us Commodities said.

September soybeans added 0.5 cents to $10.00 a bushel, with the November lot unchanged at $9.99 a bushel.