Chicago | Reuters — U.S. wheat and corn futures fell on Wednesday on profit taking from the previous session’s strong rally, grain dealers said.
Bargain buying pulled the grain contracts from their session lows ahead of the close. “Yesterday was probably a little overdone in the wheat market,” said Jim Gerlach, president of Indiana-based A/C Trading. “You are seeing a little bit of back and fill today.”
Soybean futures were higher, but gains were kept in check as the market waited for Chinese purchases, the day after Beijing said it would issue exemptions on retaliatory import duties imposed on nearly 700 U.S. goods, including soybeans.
Tuesday’s rally of more than four per cent in wheat was triggered by news of a further cut to Australia’s official estimate of its drought-hit harvest, with the movement finding additional fuel from chart-based buying.
CBOT March wheat ended off 1-1/2 cents at $5.65-1/4 a bushel (all figures US$). K.C. hard red winter wheat and MGEX spring wheat notched bigger declines, with the K.C. March contract shedding 1.2 per cent.
Strength in the dollar, which makes U.S. wheat relatively more expensive for overseas buyers and dims export prospects, also contributed to the bearish tone.
The U.S. dollar climbed to nearly a three-year high against a basket of other currencies, strengthening on housing data.
CBOT March corn ended down 2-1/2 cents at $3.80-1/2 a bushel. March soybeans were up five cents at $8.97-1/4 a bushel.
“Nobody wants to get too bearish with China lowering all those tariffs getting ready to buy,” A/C Trading’s Gerlach said. “(But) they want to see some sales before the bulls take charge.”
Prospects for China ramping up agricultural purchases have been clouded by the coronavirus epidemic, which has killed around 2,000 people and disrupted travel and business.
Chinese import needs in soybeans have also been dented by a pig disease crisis that has reduced demand for feed.
Grain markets were also looking ahead to crop forecasts expected at a Feb. 20-21 conference organized by the U.S. Department of Agriculture (USDA), which may give clues to U.S. planting trends and expectations of export demand.
Analysts forecast that USDA would peg 2020 corn plantings at 93.6 million acres, up from 89.7 million in 2019, and soybean plantings at 84.6 million acres, up from 76.1 million in 2019.
— Mark Weinraub is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz and Forrest Crellin in Paris and Naveen Thukral in Singapore.