U.S. grains: Soy off on technical sales, soymeal drop

U.S. soybean futures fell 1.6 per cent on Wednesday, dropping on a wave of technical selling after early strength failed to push prices above last week’s highs, traders said.

Wheat and corn also were weak, with wheat sagging to an 18-month low as huge global supplies crimp demand for U.S. offerings on the export market, traders said.

Wheat remained under pressure from Egypt’s decision earlier this week to bypass U.S. supplies in its latest purchase. Wheat has shed 4.5 per cent of its value during the current losing streak, but freight costs still made it more expensive than supplies from other destinations.

“The wheat market is continuing its move to new lows as the prospect for U.S. export business decreases,” Sterling Smith, futures specialist for Citigroup, said in a note to clients.

“There is a chance that U.S. supplies will stand a better chance in tenders for February as futures prices soften toward $6. However, this is a small window for merchants to exploit before other supplies become more available.”

Chicago Board of Trade March soft red winter wheat ended down seven cents at $6.12-3/4 a bushel (all figures US$). The five-session losing streak for the benchmark contract was the longest since a seven-session decline ending Nov. 12.

“Wheat prices are being weakened today by good global supplies, a trend we have seen for several days,” said Commerzbank analyst Michaela Kuhl. “Overall, prospects for the new 2014-15 season are also positive, bringing the outlook of good supplies into the new season.”

The global supply glut was blunting the demand for U.S. wheat on the export market. In its latest deal, Egypt bought 120,000 tonnes from Romania and Russia.

CBOT January soybeans dropped 22-1/2 cents to $13.24 a bushel. Soybeans were firm early in the trading day, but a drop in soymeal, which fell on a wave of profit taking after setting contract highs, pressured the market.

March corn ended down 1-3/4 cents at $4.25 a bushel. The contract rose early but ran into technical resistance near its 20-day moving average.

The U.S. Federal Reserve announced plans to trim its aggressive bond-buying program on Wednesday but sought to temper the long-awaited move by suggesting its key interest rate would stay lower for even longer than previously promised.

The stimulus has been a major contributor to gains in equity markets this year and has affected market sentiment in commodities.

– Mark Weinraub is a Reuters correspondent covering grain futures markets from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.