Chicago | Reuters –– U.S. wheat futures closed at their lowest level in three weeks on Wednesday as grain markets came under renewed pressure from large global supplies and lackluster export demand.
Egypt, the world’s top wheat importer, bought 120,000 tonnes of Argentine wheat in a tender that highlighted the intense competition U.S. sellers face on the world market.
The deal came after Argentina’s new president said he would eliminate wheat and corn export taxes as part of his plan to revitalize the country’s farm sector.
There were no offers in Egypt’s tender for U.S. wheat, which is considered too expensive to compete on the global market, traders said.
“We saw some very steep competition out there,” said Rich Nelson, chief strategist for Illinois brokerage Allendale.
At the Chicago Board of Trade, nearby March wheat ended down 2-1/4 cents at $4.69-1/2 a bushel after trading as low as $4.68 during the session (all figures US$).
Forecasts for snow in U.S. wheat-growing areas, including Kansas and Texas, added pressure to prices, traders said. Snow cover could protect dormant crops from damage from frigid temperatures this winter.
Globally, wheat production is expected to reach a record high, according to the U.S. Department of Agriculture, which this month raised its estimate for Argentina’s 2015/16 wheat exports because of government policy changes.
The corn market also “continues to be plagued by competition for export sales,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
March corn fell 3/4 cent to $3.65-1/2 a bushel after trading as low as $3.64-1/2, its weakest level since Dec. 17. Corn slid 1.6 per cent on Monday.
March soybeans slumped 4-3/4 cents to $8.80-3/4 a bushel.
Forecasts for beneficial rains in Brazil, the world’s top soybean producer, weighed on prices, traders said. The market pulled back after hitting a two-week high on Friday on worries that Brazil’s soybean harvest could be slightly smaller than earlier predictions.
Commodity funds sold an estimated net 5,000 soybean contracts and 2,000 each of corn and wheat contracts at the CBOT, trade sources said.
On Thursday, the markets will close early, at noon CST (1800 GMT), before the Christmas holiday on Friday.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.