U.S. grains: Wheat sags on adequate world supplies, fund selling

Corn follows wheat lower; soy flat

CBOT March 2020 wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. wheat futures fell to a seven-week low on Tuesday as signs of adequate global supplies and softening world cash prices triggered a round of what appeared to be fund-driven long liquidation, analysts said.

Corn futures also fell while soybeans ended flat to fractionally higher after the U.S. Department of Agriculture (USDA) raised its forecast of U.S. soybean exports.

Chicago Board of Trade March wheat settled down 10 cents at $5.42 per bushel after touching $5.39, the contract’s lowest since Dec. 24 (all figures US$). CBOT March corn ended down two cents at $3.79-3/4 and March soybeans finished up 1/2 cent at $8.84-3/4 a bushel.

Wheat tumbled after the USDA in a monthly report trimmed its forecast of 2019-20 world wheat ending stocks to 288.03 million tonnes, nearly unchanged from 288.08 million previously, while analysts surveyed by Reuters on average had expected a bigger reduction to 287.44 million tonnes.

In the export market, Egypt’s main state wheat buyer purchased 360,000 tonnes of Russian and Romanian wheat in an international tender at prices that were down roughly $6 a tonne from what was paid at its last wheat tender on Jan. 30.

More than one million tonnes of wheat was offered overall.

“There was a lot of Russian wheat offered, which kind of dispelled this notion that they are running short of wheat,” said Rich Feltes, vice president for research with R.J. O’Brien.

CBOT wheat appeared primed for a sell-off after the U.S. Commodity Futures Trading Commission’s weekly supplemental commitments report showed large speculators stretched their net long position in the week ended Feb. 4 to 21,650 lots, their biggest net long in wheat since mid-2007.

“The managed funds are out on a limb here,” Feltes said.

CBOT corn followed wheat lower after USDA’s monthly report failed to offer much supportive data. USDA left its forecast of U.S. 2019-20 corn ending stocks unchanged at 1.892 billion bushels, while analysts surveyed by Reuters on average expected a reduction.

“With a big South American crop coming off, and U.S. demand is OK but not great, the path of least resistance seems to be down,” said Tomm Pfitzenmaier, analyst with Iowa-based Summit Commodity Brokerage.

Soybean futures closed firm after a choppy session as traders digested USDA’s report. The government cut its forecast of U.S. 2019-20 soybean ending stocks to 425 million bushels, from 475 million previously, citing increased export demand from China.

However, USDA raised its estimate of Brazil’s soybean crop to 125 million tonnes, up two million from January, and raised its forecast of global 2019-20 soy ending stocks.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Colin Packham in Sydney.

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