Chicago | Reuters –– Chicago Board of Trade soybean futures fell on Tuesday after the U.S. Department of Agriculture surprised analysts by leaving its forecast of domestic soy inventories unchanged in a monthly report.
A strong dollar hung over the commodities sector, pressuring grains as well as crude oil and copper. But wheat closed higher, rallying on short-covering.
At the CBOT, May soybeans settled down 8-3/4 cents at $9.84-1/2 per bushel. May corn ended down 3/4 cent at $3.88 a bushel, while May wheat settled up 3-1/4 cents at $4.93-1/4 a bushel (all figures US$).
The U.S. dollar rallied across the board as the prospect of the first rise in U.S. interest rates in almost a decade stoked global volatility.
Strength in the dollar makes U.S. grains less attractive to those holding other currencies.
“The dollar automatically tends to put a lid on things,” said Tom Fritz, a partner at EFG Group in Chicago.
Soybeans extended losses after the USDA in its March supply/demand report left its forecast for U.S. 2014-15 ending stocks unchanged at 385 million bushels, above an average of analyst estimates of 376 million.
The government raised its forecast for global soy ending stocks to 89.53 million tonnes from 89.26 million last month.
“The surprise for me was that USDA chose not to change soybean numbers on this report for both the U.S. side and Brazil and Argentina. That might be a little concerning to some of the bulls in the market,” said Rich Nelson, chief strategist at Allendale Inc.
Wheat rallied from early declines on fund short-covering as the U.S. winter crop starts to emerge from dormancy amid dry conditions in parts of the Plains.
USDA’s report held little fresh news for CBOT wheat, which hit a five-month low last week as ample world supplies and strength in the dollar hurt U.S. export demand. USDA left its U.S. wheat export forecast unchanged at 900 million bushels, a five-year low.
Corn futures briefly rallied after USDA cut its domestic ending stocks forecast to 1.777 billion bushels, down 50 million from last month. But the bearish trend in outside markets overshadowed USDA’s corn view.
“You have to look at it in the scope of a sharply higher dollar and the Dow sharply lower, so you’ve got the macro markets working against you,” said Jim Gerlach, president of A/C Trading.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Colin Packham in Sydney.