Wheat prices retreated on Monday as Argentina backtracked on a lowball estimate for its harvest, saying a forecast of 8.8m tonnes had been made "in error" and reflected only part of the crop.
Wheat futures for December delivery, which touched a four-month high of $7.11 ¼ a bushel in early deals on Monday, fell back to $6.98 ¼ a bushel in mid-morning deals, a drop of 1.1%.
The retreat was fuelled by an admission by Argentina's farm ministry that a forecast on Thursday of an 8.8m-tonne forecast had been made "in error".
"There will be a correction in the coming days, because the number that was given was a partial estimate," a ministry spokesman said, adding that it was as yet unclear whether the amended forecast would be released this week.
The "stunningly low" forecast for an 8.8m-tonne crop had "lit a fire under" wheat futures, just after they had appeared to be showing "clear topping action" last Wednesday, said Doane.
The US broker said that private estimates for Argentine wheat harvest are placed at about 9.5m-10m tonnes, although official forecasts are larger.
The Buenos Aires grains exchange pegs the crop at 10.35m tonnes, while the International Grains Council has an 11.0m-tonne figure and the US Department of Agriculture a 12m-tonne estimate.
'Whiff of political interference?'
The lowball harvest estimate had sparked concerns not just of a cut to Argentine wheat exports, but of the country banning shipments altogether to protect domestic supplies and keep food prices in check.
"Do we detect a whiff of political interference here?" traders at a major European commodities house asked on Friday.
"The government would love to slap an export ban on wheat, just to keep bread prices down."
Some observers believe the potential delay of a revised harvest figure next week has political implications too, given that Sunday will see mid-term elections, for which the Victory Front coalition led by Cristina Fernandez Kirchner is scrambling for support in the face of expectations it will lose its congressional majority.
Argentina's export capability is particularly sensitive this year given the poor crop in Brazil, a structural importer, which is being forced to turn to North America for supplies.
The IGC has pegged Argentine exports at 6.5m tonnes in 2013-14, already a historically low figure, below the 12.9m tonnes recorded two years ago.
Argentina's decline as a wheat exporter has been fuelled by an unwillingness by farmers to grow the grain because of the risk of export curbs, denying producers exposure to any strength in international prices.