Glacier FarmMedia—The week ended June 5 was one to forget for grains at the Chicago Board of Trade (CBOT) and there are few indications the overall weakness will end anytime soon.
Wheat prices led the way as the July Chicago contract fell 46 cents per bushel at US$4.46. The July Kansas City hard red wheat contract dropped 43.5 cents at US$6.7625/bu., while the July Minneapolis spring wheat contract lost 39.5 cents at US$7.1250/bu.
July corn was down 16 cents at US$4.3925/bu., while July soybeans declined 36.75 cents at US$11.7725.
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Terry Reilly, senior agricultural strategist at Marex in Chicago, largely attributed the price drops to technical selling. He also acknowledged the role recent crop ratings have played to bring prices down.
“Technical selling is basically the main feature. Also, spring wheat ratings being reported above-average. Winter wheat ratings improving a little bit,” he said, adding that recent rains on the Canadian Prairies have also brought some additional pressure to wheat prices.
Tumbling wheat prices were also spilling over into corn and soybeans, according to Reilly. Lower wheat prices have already triggered additional wheat export demand, as evidenced by recent purchases by Egypt and Algeria on June 4. However, that effect won’t likely be seen for corn and soybeans.
“Corn and beans have been basically following wheat lately, but there’s nothing really bullish in those markets at the moment,” he said. “I don’t think there’s necessarily (demand for U.S. soybeans) because they’re still overvalued compared to South America. But for corn, I think export interest will be pretty decent.”
Traders are looking ahead to the United States Department of Agriculture’s (USDA) monthly World Agricultural Supply/Demand Estimates (WASDE) to be released on June 13. Reilly doesn’t expect too many changes to domestic figures, but he anticipates winter wheat production to increase by 20 million bushels as well as more corn for feed usage.
“For the beans, exports could be down. So I’m looking for a higher carryout in beans. Unchanged to lower carryout in corn and a higher carryout in wheat for new crop,” Reilly said.
With the lack of weather premiums in North American grain markets, he added that it’s hard to say when contracts will hit their respective bottoms. However, Reilly believes there is still room for grain prices to go lower.
“Right now, I think we’re going to see a wide trading range in the medium-term,” he said. “I think beans will remain in a sideways-to-lower trading range. Corn may be in a sideways-to-lower trading range.
“But it really all depends on the wheat. No one knows if the rally is over in the wheat market.”
