U.S. grains: Wheat nears two-month low on export competition

Corn, soybean futures also sag

CBOT July 2020 wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. wheat futures slid to a near two-month low on Wednesday, testing psychological support at the $5-per-bushel mark, pressured by forecasts for rising global grain supplies and strong export competition, analysts said.

Soybean and corn futures also declined as a speedy U.S. planting pace supported expectations for large harvests. Traders shrugged off support from confirmation of fresh U.S. soybean sales to China.

Chicago Board of Trade July wheat settled down 12-3/4 cents at $5.01-3/4 per bushel after dipping to $5.00-1/4, the contract’s lowest level since March 18 (all figures US$).

CBOT July soybeans ended down 12-1/2 cents at $8.39-1/2 a bushel, and July corn finished down four cents at $3.18-1/4 a bushel.

Wheat posted the biggest declines on a percentage basis. A day earlier, the U.S. Department of Agriculture projected that global wheat stocks at the end of the 2020-21 marketing year would rise to a record-large 310.12 million tonnes, up from 295.12 million at the end of 2019-20.

USDA projected reduced U.S. wheat exports in 2020-21 compared with a year earlier, while exports from Russia, Argentina, Australia and Canada should rise.

“Even though wheat supplies are little more snug in the United States for new crop… USDA is telling the trade we will remain priced out of global markets for another 12 months,” said Terry Reilly, senior analyst with Futures International.

Analysts also noted improving moisture bolstering wheat production prospects in Europe and the Black Sea region.

“Rains increased across France, Spain, southern Germany, northern Italy, Poland, and Czechia this past week which helped to improve moisture a bit for wheat and rapeseed growth,” space technology company Maxar said in a daily weather note.

Soybeans fell as pressure from a strong U.S. planting pace overshadowed support from export sales.

USDA confirmed private sales of 396,000 tonnes of U.S. soybeans to China, a day after reporting sales of an additional 136,000 tonnes to the world’s top soy importer.

Weather forecasts in the Midwest crop belt were generally favourable for seeding. USDA said the U.S. soybean crop was already 38 per cent planted and the corn crop was 67 per cent planted by Sunday, both ahead of their respective five-year averages.

Market players continued to digest Tuesday’s USDA forecast for U.S. corn stockpiles to top 3.3 billion bushels in 2020-21, the most in 33 years.

China is allocating more low-tariff import quotas for corn this year and may expand its use of wheat quotas as it seeks to step up farm purchases from the United States and meet a pledge to comply with global trade rules, three sources told Reuters.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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