Chicago | Reuters — U.S. wheat futures fell more than one per cent for their second straight session of declines on Wednesday in a selloff sparked by forecasts for rain in parched growing regions in the southern U.S. Plains.
Corn futures edged narrowly lower on pressure from the steep downturn in wheat while soybeans moved higher as investors squared positions ahead of a quarterly grain stocks report from the U.S. Department of Agriculture that is expected to show razor-thin U.S. supplies of the oilseed.
A government report this week showed worsening conditions in southern U.S. Plains wheat states Kansas, Oklahoma and Texas, where dry soil and windy conditions could limit yield potential of the hard red winter wheat crop as it exits dormancy.
But rains of less than one inch on Wednesday and forecasts for further precipitation in the coming days pressured wheat prices, which last week jumped to their highest since June.
“I think that even the discussion of rain could be enough to break this wheat market; it has been a steep ride up,” said Joe Vaclavik, president of Standard Grain brokerage in Chicago.
“I think this system that is developing over Texas and part of Oklahoma might be part of the reason. The amounts of this particular system this week are supposed to be minimal, but that doesn’t mean it could not turn into something bigger,” he added.
Chicago Board of Trade May wheat fell 11-1/2 cents, or 1.6 per cent, to $6.96-3/4 per bushel while KC May hard red winter wheat eased 20-1/2 cents, or 2.6 per cent, to $7.71-1/4 (all figures US$).
Corn futures for May delivery were down two cents at $4.84-1/2 per bushel while CBOT May soybeans gained 12 cents to $14.40.
Some U.S. soybean processors were shutting down for a week or more for seasonal maintenance, limiting availability for the animal feed soymeal. Soymeal futures gained one per cent.
“The U.S. downtime list as far as crushers are concerned is growing, which may have been behind some of the meal spread strength today,” said Charlie Sernatinger, analyst at ED+F Man Capital in Chicago.
In addition to the quarterly grain stocks report, USDA on Monday will also estimate spring plantings for corn and soybeans. The two reports typically result in big swings in prices and traders were evening their books ahead of the release.
“I think the markets are drifting down in advance of the USDA spring planting and stocks estimates on Monday,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The spring USDA forecasts are traditionally among those which can cause heavy market volatility, so we are seeing positioning ahead of them.”
Analysts polled by Reuters expect USDA to raise its estimates for soybean planted area at the expense of corn.
“Unless we get presented with some additional supporting news from the weather or exports, there is a risk that we could see the markets drift down in advance of the USDA reports on Monday, considering that wheat, corn and soybeans are all currently at somewhat elevated levels,” Hansen added.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Michael Hogan in Hamburg and Naveen Thukral in Singapore.