Chicago | Reuters — U.S. wheat fell on Wednesday, extending a week-long decline on investment fund selling tied to favourable conditions for crops in the world’s top producer and exporter.
Cheaper grain offered from shippers in Europe and the Black Sea region also weighed on futures for U.S. wheat.
Corn was slightly higher but hovering near a three-month low while nearby soybean contracts also posted narrow gains as futures rebounded after large declines on Tuesday.
Trading volumes spiked in the previous session while open interest in grains futures declined, suggesting liquidation of long bullish bets by investors. The volume moves came after U.S. regulatory data last week showed that speculative traders, a category that includes hedge funds, reduced long holdings in corn and soybeans and switched to a net short in wheat futures.
“Much of what we are seeing is simple position squaring by the funds ahead of month end. Fresh news is very limited for trade to work with, limiting trader interest,” said Karl Setzer, analyst at the MaxYield Cooperative in West Bend, Iowa.
With two trading days left in May, wheat futures were on pace to decline more than 10 per cent for the month — their worst monthly performance since September 2011. Corn was heading for their largest monthly since last September and soybeans the largest decline since January.
The big drop in prices generated modest buying interest, with wheat having its smallest daily drop during its recent six-session streak of losses while corn and soybeans pared earlier losses.
“It got oversold and not a lot of guys want to sell into a hole like this,” said Chris Manns, analyst at the Traders Group in Chicago.
CBOT July wheat finished 2-1/4 cents lower at $6.38-3/4 per bushel while CBOT July corn gained 2-3/4 cents to $4.72-1/2 and July soybeans jumped nine cents to $14.97-3/4 (all figures US$).
“The better weather conditions in the U.S. were the main reason why corn, wheat and cotton prices dropped to three-month lows in recent days,” Commerzbank said in a report. “The soybean price, on the other hand, is still being helped by the currently tight supply situation in the U.S., where stocks have declined sharply as a result of high exports.”
The U.S. Department of Agriculture said in its weekly crop report that U.S. winter wheat was rated 31 per cent good to excellent as of May 25, up two percentage points from a week earlier. USDA also said that corn planting was 88 per cent complete as of May 25, matching analysts’ expectations as well as the five-year average.
“Planting progress is significantly better and forecasts show that the weather is likely to be favourable for crop development,” said Vyanne Lai, of National Australia Bank.
“Earlier concerns about dry conditions impacting the winter wheat crop in the U.S. Plains have eased somewhat following rain.”
Concern about tight U.S. soybean supplies after a hefty flow of exports this season supported soybeans. USDA said China bought 110,000 tonnes of soybeans for delivery in the new-crop marketing year, the eighth such “flash” sale this month.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.