Chicago | Reuters — U.S. wheat futures sank to 5-1/2-year lows on Wednesday under pressure from large global supplies and sluggish demand, in the markets’ fifth consecutive session of declines.
Corn and soybean futures each fell for a second day, pressured by the prospect of bumper crops in South America coming to market. Follow-through selling weighed on prices, although traders were cautious ahead of the release of closely watched U.S. government planting forecasts due on Thursday.
The U.S. Department of Agriculture will release acreage forecasts at its annual two-day Outlook Forum that are expected to say that farmers will plant more corn and soybeans this year than last year.
“Today we’re more or less just treading water ahead of the Outlook Forum,” said Karl Setzer, risk management team leader for MaxYield Cooperative in Iowa.
Chicago Board of Trade front-month wheat dropped 5-1/4 cents to $4.42-3/4 a bushel after touching its lowest since June 2010 at $4.38 (all figures US$). The contract slid 10-1/2 cents on Tuesday.
The most-active May contract dipped 4-1/2 cents to $4.51-1/4 after also dropping to its lowest since June 2010.
For U.S. wheat, “the demand isn’t there,” Setzer said. “Stocks are huge.”
On Thursday, traders will assess the results of an import tender from Egypt, the world’s largest wheat buyer.
Egypt recently roiled global grain markets by rejecting wheat cargoes for containing too much of a fungus called ergot, after government bodies issued conflicting rules on permitted levels of the fungus.
In its most recent tender last week, Egypt bought 240,000 tonnes of French and Russian wheat for March 15-25 shipment after receiving offers from four trading houses.
“Weaker currencies have provided Black Sea and Argentine exporters with a tremendous competitive advantage over the U.S.,” Rabobank analysts said in a note.
Front-month soybean futures slipped 1-3/4 cents to $8.67-1/2 a bushel, and spot corn futures shed 2-1/4 cents to $3.59-3/4 a bushel.
The declines were “really follow-through from yesterday,” said Arlan Suderman, chief commodities economist for INTL FCStone.
Prior to the setback, corn and soybean futures had risen to multi-week highs as crude oil and equity markets rallied. The gains left the farm markets ripe for falling prices linked to profit taking, traders said.
USDA said Colombia bought 110,000 tonnes of U.S. corn within the last 24 hours.
— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.