U.S. grains: Wheat falls below $5 on global supply, forecasts

(Michael Thompson photo courtesy ARS/USDA)

Chicago | Reuters –– Chicago Board of Trade wheat futures fell roughly two per cent on Friday, dropping below US$5 a bushel amid plentiful global supplies and forecasts for timely rains in the U.S. Plains, analysts said.

Corn firmed after hitting a one-month low ahead of a busy U.S. harvest weekend. Soybean futures fell on profit-taking following a rally to two-month highs this week, with the front month ending below $9 a bushel (all figures US$).

At the CBOT, December wheat settled 10-1/4 cents at $4.92-1/4 per bushel after dipping to $4.89-3/4, its lowest since Sept. 22. Technical selling picked up as the contract dropped below the $5 mark.

“We have just got a problem of too much wheat,” said Alan Brugler, president of Brugler Marketing and Management. “Wheat gets these rallies due to short covering, but once they cover positions, nobody wants to buy it.”

The U.S. Department of Agriculture (USDA) has projected that global wheat stockpiles will total 228.5 million tonnes by the end of the 2015-16 marketing year, a record high.

Some weather forecasts also predicted showers late next week that should boost newly-planted winter wheat fields in Kansas, Oklahoma and Texas, and encourage producers who have been delaying seeding because of dry soils.

“The upturn in rains in the Plains will improve moisture for wheat,” MDA Weather Services said in a daily note.

CBOT December corn ended up 1-1/4 cents at $3.76-3/4 a bushel, rebounding after falling to $3.72-1/2, a one-month low. November soybeans finished down 7 cents at $8.98-1/4.

Grain and oilseed futures were pressured this week by investors retreating from commodities.

“It’s this malaise toward the commodity sector as a whole that we’ve seen, led by crude oil,” said Arlan Suderman, analyst with Water Street Solutions.

“Crude oil looked like it was going to break out earlier in the week and then hit resistance. Ever since then, we have seen weakness in the broader commodity indices, and that has left a negative tone for grain and oilseeds as well,” Suderman said.

Soybeans closed near session lows despite signs of improving export demand. USDA on Friday reported weekly U.S. soybean export sales at nearly 1.5 million tonnes, near the high end of trade expectations.

“I was pretty encouraged by the exports. I think we are going to (continue to) see 1.5 million tonnes a week for a while now,” Brugler said, noting increased demand from top global soy buyer China.

Weather forecasts called for mostly dry conditions in the U.S. Corn Belt through early next week, allowing the harvest of soybeans and corn to progress. The USDA reported soybean harvest progress at 62 per cent and corn progress at 42 per cent as of Oct. 11.

Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral and Gus Trompiz.

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