Chicago | Reuters –– U.S. wheat tumbled as much as two per cent on Wednesday, with benchmark Chicago Board of Trade (CBOT) futures falling the most in a week after top global wheat importer Egypt cancelled a tender seeking supplies from the U.S.
Overbought technical conditions and profit-taking also pressured prices, with CBOT corn and soybeans each declining more than one per cent.
“When you have an oversupply or a strong supply, the path of least resistance is lower,” Jefferies Bache analyst Shawn McCambridge said.
CBOT wheat fell to session lows after the midmorning news that Egypt’s state grain buyer had cancelled a rare tender seeking offers of only U.S. wheat for April arrival. The tender came after the U.S. extended a credit line of $100 million to Egypt (all figures US$).
However, with U.S. wheat still uncompetitive into Egypt, the tender was cancelled. The cheapest U.S. offer was roughly $60 per tonne more than the wheat Egypt bought earlier this month from France and Romania.
After the close, Egypt issued another tender, seeking offers of worldwide origin.
Most-active CBOT March wheat fell seven cents, or 1.3 per cent, to $5.27-3/4 per bushel while K.C. hard red winter wheat fell 2.5 per cent. The closely watched spread between the two wheat classes tumbled to a two-month low, with K.C. wheat priced at a roughly 20-cent premium to Chicago.
“We’re reacting to the Egypt tender being cancelled. It’s a reminder of how far out of the market we are,” McCambridge said.
Wheat fell from the highest levels in a month while soybean futures drifted from a five-week peak reached earlier in the session. CBOT March soybeans finished 12 cents lower at $9.95-3/4 per bushel. CBOT March corn was down 5-3/4 cents at $3.83-3/4 after touching a one-week high on Tuesday.
South America is in the early phases of record-large soybean harvests while there still are plentiful supplies of both soybeans and corn after record U.S. harvests last autumn.
“I remain fundamentally bearish on soybeans with a large Brazilian soy crop now arriving,” said Stefan Vogel, head of agricultural commodity markets research at Rabobank. “After the Chinese and Asian Lunar New Year holidays we are likely to see significantly more Brazilian export activity.”
“Corn is currently drifting, with little new price-driving factors,” Vogel said.
— 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.