U.S. grains: Wheat tumbles after USDA hikes world stocks forecast

Chicago | Reuters — U.S. wheat futures fell 1.8 per cent on Wednesday after the U.S. Department of Agriculture raised its forecast for global 2013-14 wheat ending stocks above trade expectations, traders said.

Corn followed wheat lower, but soybeans advanced with front-month May setting a life-of-contract high above $15 a bushel after the USDA’s monthly report (all figures US$).

At the Chicago Board of Trade, May wheat ended down 12 cents at $6.69 a bushel and May corn fell 4-3/4 cents at $5.02-1/4 a bushel.

May soybeans ended up 12-3/4 cents at $14.95-1/4 after touching $15.12, a contract top and the highest spot price since July 2013.

Wheat made the biggest percentage move of the three major commodities, tumbling after USDA raised its forecast for 2013-14 world wheat ending stocks to 186.68 million tonnes, above a range of trade estimates. The figure was an upward revision from USDA’s March forecast of 183.81 million tonnes.

“The biggest takeaway from the report is the world ending stocks getting bigger on wheat,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

The USDA report “is positive for corn and beans and negative on wheat from a world perspective,” he added.

Front-month CBOT wheat was primed for profit-taking after rising more than 16 per cent during March, and rising more than 20 per cent since hitting a 3-1/2-year low in late January at $5.50 a bushel.

Much of the buying was driven by commodity funds, which shifted to a net long position in CBOT wheat in the week ended April 1, according to weekly data from the U.S. Commodity Futures Trading Commission.

CBOT corn surged after the report, with the May contract touching $5.19, the highest spot price since August. But the market retreated as adequate global corn supplies helped offset tightening stocks in the United States.

Cash sales by farmers added pressure, traders said.

USDA pared its U.S. 2013-14 corn ending stocks forecast to 1.331 billion bushels, below an average of trade estimates for 1.403 billion. But the government made only a modest cut to its world ending stocks forecast, which at 158 million tonnes surpassed the average trade estimate of 157.7 million tonnes.

“World ending stocks were down only half a million tonnes at 158 million, so that is certainly not a tight situation,” said Shawn McCambridge, analyst at Jefferies Bache in Chicago.

“After the report, people immediately looked at the U.S. number, and then they looked at (the) world balance sheet and reconsidered,” McCambridge said.

Soybeans soar

Soybeans jumped after the report, in which USDA cut its forecast for the 2013-14 soybean carryout to 135 million bushels, down 10 million from last month. The figure was below an average of trade estimates for 139 million bushels and would represent a 10-year low, if realized by the end of the marketing year on Aug. 31.

The soy stocks figure might have been even smaller, but USDA raised its forecast of U.S. soybean imports to a record high 65 million bushels, a figure some analysts questioned.

The U.S. is the world’s biggest soybean producer and the No. 2 supplier after Brazil, but surging demand from exporters and crushers has pulled stockpiles down to minimal levels, resulting in the need for imports.

“I think USDA is just toying with stuff to make this (soybean balance sheet) work… One can really question whether U.S. ports can handle 65 million bushels of imports. We’re an export country, not an import country,” said Karl Setzer, market analyst at MaxYield Cooperative in West Bend, Iowa.

— Julie Ingwersen is a Reuters correspondent covering ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Sybille de La Hamaide and Naveen Thukral.

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