U.S. wheat futures dipped on Tuesday,pressured by poor export demand for U.S. supplies, traders said. The benchmark Chicago Board of Trade December soft red winter wheat contract ended 1/2 cent lower at $8.57-1/2 a bushel.
CBOT wheat has fallen for four days in a row but prices for the December contract found support at its 100-day moving average of $8.55-7/8 a bushel. Prices have not closed below that key technical level since June 18.
Argentina’s 2012-13 wheat output seen at 10 million tonnes, the Rosario grains exchange said in its first estimate of this year’s crop.
Tunisia’s state grains agency tendered to buy 100,000 tonnes of soft milling wheat for delivery in December or January, European traders said. Bidding deadline is Wednesday.
Ukraine’s wheat production fell to 14.18 million tonnes this year from 20.6 million tonnes in 2011 due to bad weather during sowing and wintering, UkrAgroConsult agriculture consultancy said.
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Corn
Chicago Board of Trade corn futures were higher on technical buying after the December contract held above support at its 100-day moving average and on spillover support from strong gains in soy, traders said. Light rain, wind and some snow from remnants of Hurricane Sandy will cause a brief slowdown harvesting corn and soybeans in the eastern U.S. Midwest this week, an agricultural meteorologist said on Tuesday.
"There will be about 0.50 inch of rain, wind gusts to 30 mph Tuesday through early Wednesday in Indiana, Michigan and Ohio," said Kyle Tapley, meteorologist for MDA EarthSat Weather.
Tapley also said colder temperatures were expected with light snow in the eastern Corn Belt leaving about 2.00 inches of snow in southwest Ohio. "It won’t last long then be followed by a clearing trend and drier throughout the Midwest," Tapley said.
Reuters poll of 11 analysts estimated the U.S. corn harvest at 93 per cent complete, a record for late August.
USDA’s weekly crop progress report delayed to Wednesday due to the shutdown by Hurricane Sandy.
Argentina could lose 20 per cent of its projected con crop this season because of violent storms that have lashed the Pampas farm belt over the last three months, a local expert said on Tuesday.
Key resistance for the December contract is at its 50-day moving average of $7.66-1/4 and key support is at the 100-day moving average of $7.38-1/2. The nine-day relative strength index is at 44.
Soybeans
U.S. soybean futures rallied Tuesday on bargain buying one day after posting a two per cent decline, buoyed by a softer dollar, firm cash markets and talk of Chinese demand, traders said.
Corn futures firmed on technical buying after a six-day slide while wheat was choppy, losing ground to corn on inter-market spreads. Volume was light as U.S. stock markets were closed for a second day and investors waited to see the full impact of Hurricane Sandy, the massive storm that wrought destruction across the eastern United States.
But world shares rose modestly and the dollar fell, lending support to dollar-denominated commodities.
"Yesterday was overextended, especially in the beans. The outside markets (today) are supporting us here. The weaker dollar is giving us a chance to recover," said Art Liming, futures specialist with Citigroup in Chicago.
Soybeans drew support from talk that China was buying more U.S. soybeans, given that front-month CBOT futures have fallen 14 per cent from their all-time high of $17.94-3/4 set in early September.
"The rumours are very strong that China is buying more and more beans on this break. Crush margins in China are negative right now, but this doesn’t seem to make much difference," said Bill Gary, president of Commodity Information Systems in Oklahoma City, Oklahoma.
Also bullish were ideas that the South American crop currently being planted might not be as large as initially expected. The grains trade is counting on a bumper South American crop to replenish global supplies after drought cut the latest soy harvests in the United States and South America.
Michael Cordonnier, president of Soybean and Corn Advisor, lowered his forecast of 2012/13 Brazilian soybean production to 80 million tonnes, from his previous estimate of 81 million to 83 million.
The U.S. Department of Agriculture currently projects Brazil’s crop at 81 million tonnes. Hamburg-based oilseeds analyst Oil World cautioned that rain delays could reduce soy plantings in Brazil and Argentina.
"Although it is still early in the season, there is now a higher risk that initial estimates of a sharp increase in soybean production by 36 million tonnes or 30 per cent will not fully materialize," Oil World said.
Firm U.S. cash markets lent support as U.S. soy crushers competed with exporters for domestic supplies. "The basis on soybeans is still extremely tight. Processors are posting good margins right now at the crush plants, and they are trying to get as many soybeans as possible," said Karl Setzer, a commodity trading adviser at MaxYield Cooperative in West Bend, Iowa.
CORN AND WHEAT
The cash market for corn was not as strong, he said, due to adequate volumes of corn entering the supply pipeline as the harvest wraps up, and sluggish export demand for U.S. corn.
"The basis is still weak on corn. Historically it’s good, but getting weaker. We are starting to see post-harvest movement on corn, more so from the commercial side.
The ground piles are being picked up and moved into the supply line," Setzer said. Underscoring the sluggish pace of export demand for U.S. corn, European traders said private Egyptian interests have in past days purchased a further 20,000 tonnes of new-crop corn from South America.
The grain was thought to have been bought from Argentina for April-May 2013 shipment, and the deals followed the purchases of 180,000 tonnes of South American corn that were reported on Monday.
Nonetheless, corn futures drew chart-based buying after the front December contract held support at the mid-October low of $7.32-1/2 per bushel. CBOT December wheat fell to a near two-week low, falling for a fourth straight day and dipping below its 100-day moving average near $8.56. Traders said wheat was pressured by investors unwinding long wheat/short corn spreads.
