Wheat prices plunged to a five-month low Wednesday as investors bet that U.S. crop yields will meet demand and ease price increases for flour, bread, pasta and other foods.
Other commodities traded mostly lower in a broad sell-off, with crude oil retreating and precious metals also falling.
The United States is expected to produce 2.4 billion bushels of wheat this year, up 16 percent from 2007, according to Department of Agriculture statistics released last week. Other big wheat-growing countries are also expecting good crops.
"There's just nothing out there to support wheat. All the crop yield estimates are bearish so that's pressuring prices," said Elaine Kub, analyst with DTN in Omaha, Neb.
Wheat for July delivery fell 31.75 cents to settle at $7.64 a bushel on the Chicago Board of Trade, after earlier falling to $7.63, its lowest level since December.
Wheat has shot up some 50 percent in the last year but is well off its all-time highs reached in March, when priced topped $12.70 a bushel.
A rally on Wall Street also pressured agriculture prices as investors shed commodities in favor of stocks, analysts said. The Dow Jones industrial average, up more than 160 points in earlier trading, closed up 66.20 at 12,898.38 after a better-than-expected consumer prices report helped ease inflation concerns.
Other agriculture futures traded mostly lower. Corn futures for July delivery lost 11 cents to settle at 5.9625 a bushel on the CBOT, while July rice futures fell 75 cents to settle at $21.49 per 100 pounds. July soybeans, meanwhile, settled flat a $13.795 a bushel.
In energy futures, crude oil fell after an Energy Department report offered a mixed view of U.S. petroleum reserves.
Light, sweet crude for June delivery fell $1.58 to settle at $124.22 a barrel on the New York Mercantile Exchange after the EIA report said crude inventories rose by 200,000 barrels last week, less than the expected 2.5 million barrel increase analysts surveyed by research firm Platts had expected.
Other energy futures also traded lower Wednesday. June gasoline futures fell 1.96 cents to settle at $3.1804 a gallon on the Nymex, while June heating oil futures fell 8.11 cents to settle at $3.6178 a gallon.
In precious metals, gold futures extended their losses after the dollar ticked higher against the euro, diminishing the appeal of precious metals as an inflation hedge.
Gold for June delivery lost $3.10 to settle at $866.50 an ounce on the Nymex after earlier falling as low as $860.
Other precious metals also traded lower. July silver dropped 21.5 cents to settle at $16.613 an ounce, while July copper shed 5.05 cents to settle at $3.681 an ounce.