Chicago | Reuters — U.S. grains slumped on Thursday, with wheat futures easing one per cent for the seventh straight session of declines on investor long liquidation tied to favourable weather for crops and cheaper supplies on offer in Europe and the Black Sea region.
Wheat futures have fallen sharply from the more than 10-month high they notched early this month amid a deep drought in the southern U.S. Plains hard red winter wheat belt. But crop-friendly rains fell over the weekend, while a weekly weather report early on Thursday showed drought conditions moderating.
Chicago Board of Trade wheat futures for July delivery were 6-1/4 cents lower at $6.32-1/2 per bushel, the lowest in about three months (all figures US$). With one trading day left in May, wheat on a continuous chart was on track to shed about 11.2 per cent on the month for the worst such performance since September 2011.
Corn futures for July delivery fell three cents to $4.69-1/2 per bushel, hovering just above the near three-month low of $4.66-1/2 notched in the previous session.
Showers were lingering in the Midwestern crop belt, while further precipitation forecast next week should benefit recently planted corn seeds, the Commodity Weather Group said in a note. The weekly U.S. Drought Monitor showed a slight expansion of abnormally dry areas in the Midwest even as the most severe drought conditions eased in the Plains.
“The reality is hitting the market,” said Don Roose, analyst at U.S. Commodities in West Des Moines, Iowa. “Funds have been big longs throughout the spring and they’re sitting with a sizeable position in a more favorable weather environment.”
U.S. regulatory data last week showed that speculative investors, a category that includes hedge funds, reduced their long bullish bets in corn for a third straight week and switched to a net short, or bearish, position on wheat futures.
Investment funds on Thursday sold 7,000 corn contracts, 4,000 wheat contracts and bought and sold equal amounts of soybean contracts, trade sources said.
The better crop conditions in the U.S. come as countries such as Ukraine have undercut U.S. shippers in international markets.
“Ukraine is selling wheat in our backyard to Mexico. We have Europe beating everyone to the punch. The competition is keen,” Roose said.
CBOT July soybean futures edged 1-1/4 cents higher to $14.99 per bushel, boosted by snug supplies and strong bids by domestic processing plants.
“Soybeans are getting a boost from tight U.S. stocks,” said Andrew Woodhouse, a grains analyst at Advance Trading Australasia. “Crush margins in China have improved over the last couple of weeks, before which soybean cargoes were being diverted from South America to the U.S.”
China has more than five million tonnes of U.S. soybeans on the books for 2014-15, on its way to an estimated 72 million tonnes from all suppliers for the year. It now represents about two thirds of global soybean imports.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Colin Packham in Sydney.