Chicago / Reuters – Chicago Board of Trade wheat futures plunged as much as 3 per cent on Tuesday, their largest daily losses in three weeks, on pressure from ample global grain supplies and following declines in Euronext wheat, traders said.
Wheat on the Paris exchange fell sharply for the second straight session, correcting after hitting the highest levels since January on Monday.
Reduced estimates for the harvest in the top exporting region of the European Union had propelled wheat higher late last week, but investors now were waiting for fresh bullish news before making further long bets.
Farmers in the United States were nearly done harvesting wheat fields that had largely better-than-expected yields, and were hedging their harvested supplies, further weighing on futures, brokerage INTL FCStone said in a note to clients.
CBOT September wheat settled 14 cents lower at $4.15 per bushel, still holding above a nine-year low of $4.06-1/2 reached on July 20. CBOT December corn fell 1-3/4 cents to $3.39-1/2 per bushel, following declines in wheat and consolidating above its life-of-contract low of $3.33-1/4 from Friday.
Soybean futures for November delivery finished 7-1/2 higher at $9.73-3/4 per bushel, rebounding after Monday’s three-month lows.
“It’s a little short-covering rally and there’s a little heat coming in the first week of August,” Highground Trading broker Scott Capinegro said. He added that investors were also cleaning up their positions as the month drew to a close.
The CME Group showed open interest in soybean futures declining during Monday’s session of lower prices, suggesting long liquidation.
Extended weather forecasts reaching into August, seen as the most crucial month for establishing U.S. soybean yields, showed sufficient precipitation that could help offset the potential for stress caused by high temperatures.
Midday weather models on Tuesday showed a stronger ridge of high pressure in the central United States growing belt that could lead to increased dryness, according to an agriculture meteorologist at Lanworth, a division of Thomson Reuters.
The U.S. Department of Agriculture after the close of trading on Monday left good-to-excellent condition ratings unchanged for the U.S. soybean and corn crops, when analysts were predicting slightly lower ratings due to heat.
Historically high U.S. crop ratings increased the likelihood for higher-than-normal yields at harvest, analysts said.
“I can’t be friendly (to higher prices) when I look at this weather,” Capinegro said.
Additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris; Editing by David Evans, Grant McCool and Paul Simao