U.S. grains: Corn, wheat follow broad commodities weakness

CBOT December 2018 corn, with Decmeber 2018 wheat in purple. (Barchart)

Chicago | Reuters — U.S. corn futures fell more than one per cent on Tuesday, following broad declines in commodities led by sagging crude oil futures, analysts said.

Wheat futures fell about two per cent, retreating after Monday’s short-covering rally, and soybeans were also lower.

Chicago Board of Trade December corn settled down 4-3/4 cents at $3.66-1/2 a bushel after dipping to $3.65-1/2, the contract’s lowest level since Nov. 2.

CBOT December wheat ended down 12 cents at $5.07-3/4 a bushel and January soybeans fell five cents to $8.78-1/4 a bushel.

Corn took a cue from U.S. crude oil, which hit an 11-month low on worries about weakening global demand, oversupply and sell-offs across other asset classes, including equities.

Corn sometimes tracks oil due to its role as the primary U.S. feedstock for ethanol fuel.

“The 11-month low in crude is starting to weigh on everything,” said Jeff French, analyst with Top Third Ag Marketing in Chicago.

The 19-market Thomson Reuters/CoreCommodity Index was down 1.8 per cent, hitting its lowest level since December.

Soybean futures declined but found underlying support after the U.S. Department of Agriculture (USDA) confirmed private sales of 276,732 tonnes of U.S. soybeans to unknown destinations.

Also, U.S. President Donald Trump’s top economic adviser said the United States welcomed the resumption of talks with China, the world’s top soy buyer, on trade.

CBOT soft red winter wheat fell more than two per cent, retreating a day after the December contract reached a three-week high on fund short-covering and optimism about improving export demand for U.S. supplies.

“The feeling is (that) as we go deeper into the end of November and early December, we are going to see Russians pull back from their selling,” said Don Roose, president of Iowa-based U.S. Commodities. However, Roose added, “When we rally, we become uncompetitive… so we pull back.”

Iraq, a major Middle East grain buyer traditionally reliant on U.S. imports, wants to allow Russian-origin wheat in its state buying tenders.

Meanwhile, traders were monitoring a cold spell in the U.S. Midwest and Plains that has slowed planting of the last of the winter wheat crop.

After the CBOT close, the USDA said the winter wheat crop was 89 per cent seeded, lagging the five-year average of 94 per cent.

But crop ratings improved. USDA rated 54 per cent of the crop in good to excellent condition, up from 51 per cent a week earlier.

USDA will release its first official estimate of U.S. winter wheat seedings in January.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Nigel Hunt in London and Colin Packham in Sydney.

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