GRAINS-Wheat drops on worries about GMO discovery in U.S.

* Unapproved GMO wheat found in United States
* Japan cancels order for U.S. wheat
* Market fears more cancellations
* Corn and soybeans take breather after gains

(Updates prices to include close of U.S. trade session, adds
new analyst quotes)
By Sam Nelson
CHICAGO, May 30 (Reuters) - Chicago Board of Trade wheat
futures fell on Thursday on concerns about the fate of U.S.
wheat exports following the discovery of an unapproved
genetically modified (GMO) wheat variety in the U.S. Pacific
Northwest (PNW).
Japan, the top importer of U.S. wheat, canceled a tender to

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farm.
"At this point, the key feature might be whether this is an
isolated incident that is confined to the PNW. The concern is
going to be whether the genetics might have inadvertently
entered the "seed" pipeline since 2005 when test plots of this
wheat were produced," said Dale Durcholz, an analyst for
Illinois-based advisory service AgriVisor.
Asian countries led by Japan are major buyers of U.S. white
wheat, a variety used for food, and sensitivities there over GMO
crops for human consumption may slow buying.
"We are likely to be the 'seller of last resort' when it
comes to Japanese purchases in the second half of the calendar

year unless new-crop supplies have been hit harder by weather
than currently assumed by the trade," said Mike Zuzolo, an
analyst for Global Commodity Analytics.
Traders said it was too early to say if the case would have
significant consequences for exports, but in a sign of effects
beyond Asia, the European Union said it would test incoming U.S.
white wheat shipments for GMO content.
CBOT wheat for July delivery closed 4 cents per bushel
lower at $6.98-3/4 per bushel.
"The cancellation by Japan of white wheat orders hurt wheat,
and now we have to figure out how much GMO wheat may be out
there," said analyst Joe Hofmeyer of CHS Hedging in Minneapolis.
"We have other customers such as the EU and China that want to
know."
Corn and soybean futures also fell on Thursday on spillover
selling pressure from the decline in wheat and on profit-taking

following recent rallies for each due to excessive wet weather
in the United States that was slowing spring plantings.
"We already had risk premium put into each market because of
the wet weather that is delaying plantings, and they're just
taking a breather now," Hofmeyer said.
Corn futures also were weighed down by weaker cash markets,
technical selling and slow export sales of old-crop U.S. corn.
CBOT corn for July delivery fell 10-3/4 cents per
bushel to $6.54-1/4, and soybeans for July were down 6 at
$14.95-3/4.
Prices at 1:27 p.m. CDT (1827 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 654.25 -10.50 -1.6% -6.3%
CBOT soy 1495.75 -6.00 -0.4% 5.4%
CBOT meal 440.80 -3.50 -0.8% 4.8%
CBOT soyoil 48.58 -0.05 -0.1% -1.2%
CBOT wheat 698.75 -4.00 -0.6% -10.2%
CBOT rice 1516.50 -29.50 -1.9% 2.1%
EU wheat 204.50 0.00 0.0% -18.3%

US crude 93.67 0.55 0.6% 2.0%
Dow Jones 15,389 86 0.6% 17.4%
Gold 1414.16 21.71 1.6% -15.5%
Euro/dollar 1.3047 0.0109 0.8% -1.1%
Dollar Index 83.0330 -0.6270 -0.8% 4.1%
Baltic Freight 811 -7 -0.9% 16.0%

(Additional reporting by Valerie Parent and Gus Trompiz in
Paris and Colin Packham in Sydney; Editing by Maureen Bavdek)