U.S. grains: Wheat drops to lowest since 2010 on record supply estimate

(USDA.gov via Flickr)

Chicago | Reuters –– U.S. wheat futures dropped to their lowest level since 2010 after the U.S. government on Thursday said year-end global supplies would be the biggest in history.

Prices crumbled as the U.S. Department of Agriculture’s forecasts for record-large world wheat production and ending stocks fuelled fears about excessive inventories.

Concerns about large supplies also pushed the most actively traded corn and soybean futures contracts to three-week and four-week lows, respectively.

“Global stocks of major crops remain burdensome,” JP Morgan analyst Ann Duignan said.

Most-active wheat futures at the Chicago Board of Trade traded as low at $4.55 a bushel, the lowest level since the summer of 2010, before closing down one cent at $4.57-1/2 (all figures US$).

Corn futures ended down 1-1/4 cents at $3.61 after the most-active contract touched its lowest price since Jan. 15.

Soybean futures finished up 3/4 cent at $8.63-1/4 on bargain buying after the most-active contract dropped to its lowest price on Jan. 12. The front-month contract reached its lowest price on a continuation chart since Dec. 17.

CBOT soymeal futures fell to contract lows in most months, and the spot contract set its lowest on a continuous chart since April 2010, led by the losses in soybeans.

Commodity funds sold an estimated net 3,500 soymeal contracts, 2,000 wheat contracts and 1,000 in corn, and were net buyers of 3,000 soybean contracts at the CBOT, traders said.

USDA, in a monthly report, raised its estimate for U.S. soybean ending stocks due to a slowdown in the pace of crushing at domestic processors.

U.S. corn and wheat ending stocks also will be higher than previously expected at the end of the marketing year due to a drop in already weak demand for U.S. supplies on the export market, according to the agency.

“Going forward, there’s nothing in these numbers that suggests anything is going to turn around any time soon on the demand side,” said Jim Gerlach, president of A/C Trading in Indiana.

Crop prospects are improving for corn and soybeans in South America, which competes with the U.S. for export business, after weekend rains eased concerns about dryness in Argentina, traders said. The country is the world’s top exporter of soyoil and soymeal and the No. 3 soybean supplier.

“Buyers remain uninterested in U.S. corn offerings and are quickly losing interest in soybeans,” said Karl Setzer, risk management team leader for MaxYield Cooperative in Iowa.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.

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