U.S. grains: Wheat drops below $5/bu on export fears, strong dollar

Wheat hit by upward revisions to Russian supply

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Chicago |Reuters – U.S. wheat futures fell nearly 2 percent on Wednesday and dropped below $5 a bushel for the first time in nearly six weeks as analysts cited technical selling mixed with worries about U.S. export prospects.

Soybeans and corn followed the weak trend, as active harvest progress in the Midwest fed the bearish sentiment. Chicago Board of Trade December soft red winter wheat settled down 9-1/2 cents at $4.99-1/2 a bushel after dipping to $4.96-3/4, its lowest since Sept. 14.

CBOT November soybeans ended down 7-1/4 cents at $8.50-1/4 a bushel and December corn fell 2 cents to $3.68-1/4 a bushel.

Wheat led the way down, with technical sales accelerating as the CBOT December contract fell below chart support near $5.05 a bushel in early moves and then sank below psychological support at the $5 mark.

Fundamentally, traders worried that supplies from top global exporter Russia will continue to curb export demand for U.S. wheat. Also, the U.S. dollar index rose to a two-month high, making U.S. grains less competitive on the world market.

Russian Agriculture Minister Dmitry Patrushev and traders of Russian grain will discuss exports at a routine meeting on Oct. 26.

“It’s all about Russia. Whether they are going to slow down exports or not – that’s the $64 dollar question,” said Don Roose, president of Iowa-based U.S. Commodities.

Russia’s agriculture ministry on Tuesday raised its forecast for the country’s 2018 grain crop to 109 million tonnes from a previously expected 106 million tonnes due to favourable weather for harvesting in Siberia.

Private consultancy IKAR, meanwhile, raised its 2018/19 export forecast for Russian wheat.

CBOT soybeans declined, with the most-active November contract dipping to $8.50, its lowest since Oct. 11, on U.S. harvest pressure and weakness in soymeal futures.

“We’ve got the gut-slot of harvest right here, on beans in particular and corn to a lesser extent. That’s what is weighing on those markets,” said Terry Linn, analyst with Linn & Associates.

CBOT corn futures fell but drew underlying support from supportive weekly ethanol data.

The U.S. Energy Information Administration said weekly U.S. output of corn-based ethanol rose to 1.02 million barrels per day, while stocks of the biofuel fell to 23.90 million barrels.

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