U.S. grains: Wheat falls on forecast for rains, but gains for week

Chicago | Reuters — U.S. wheat futures fell two per cent on Friday, pressured by forecasts for rains next week in parched southern Plains growing regions and as investors squared positions ahead of key U.S. planting and stocks data due on Monday.

Corn and soybeans were nearly unchanged in subdued trading in the run-up to the spring planting and quarterly stocks estimates from the U.S. Department of Agriculture, a data release that often generates sharp price movements.

Wheat futures posted their biggest daily drop in 10 days, but rallies early this week resulted in a narrow weekly gain — the fourth straight. Investors made bullish bets on concerns that drought will hurt wheat crops in major producing states like Kansas, Oklahoma and Texas, adding to recent support from tensions between major grain exporters Russia and Ukraine.

But forecasts for some rain in parts of the U.S. grain belt and the prospect of large global harvests in 2014 have acted as a brake on wheat prices ahead of Monday’s USDA numbers.

“We did add a little bit better shower potential into Kansas late next week, around Saturday,” Joel Widenor, a meteorologist with the Commodity Weather Group, said of the No. 1 wheat-growing state.

Wheat for delivery in May on the Chicago Board of Trade finished 15 cents lower at $6.95-1/2 a bushel. Futures gained about two cents for the week for the longest streak of weekly gains since October.

However, forecasts for improved weather, plentiful global grain supplies and pre-report positioning sparked a sell-off while some traders were also unwinding wheat-corn spreads.

“Some technical signals suggest we may have a top in the spread. Absolutely, that spread is a factor,” said analyst Terry Linn of the Linn Group brokerage in Chicago.

“The wheat market hasn’t broken down; we are just consolidating in a range. We probably won’t break down in front of the (USDA) number, but we have a shot across the bow,” Linn added.

CBOT May corn settled unchanged at $4.92 a bushel after earlier hitting a nearly three-week high of $4.96-1/4 on strong U.S. exports. Corn gained 2.4 per cent this week, the ninth increase in 10 weeks.

U.S. corn sales last week stood at 1.4 million tonnes, well above analysts’ expectations that ranged from 525,000 to 725,000 tonnes, a USDA report showed.

Soybeans also ended flat, settling at $14.36-1/2 per bushel and rising 1.9 per cent for the week.

U.S. soybean export sales last week reached only 11,900 tonnes, near the marketing-year low hit in mid-February and suggesting tight U.S. stocks may be curbing demand after brisk demand so far this season.

Analysts expect Monday’s USDA report to show U.S. soybean stocks by March 1 were 989 million bushels, which would be the smallest since 2004.

U.S. corn stockpiles are seen at 7.099 billion bushels, the biggest since 2010, and wheat stocks at a five-year low of 1.042 billion bushels.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Gus Trompiz in Paris and Manolo Serapio Jr. in Singapore.

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