U.S. grains: Wheat drops on improving crop conditions, big stocks

Chicago | Reuters –– U.S. wheat futures fell more than two per cent on Tuesday, giving up all the prior session’s gains, as a further improvement in the condition of the U.S. winter crop placed attention back on ample global supply of the staple cereal.

Corn prices eased, following wheat lower and further pressured by lacklustre export demand and ample supplies.

Soybeans failed to hold early short covering and technical buying gains and ended near unchanged. Soybeans hit a 6-1/2-year low the previous session as the market anticipated Argentina’s newly elected president would enact policies that could help boost exports, adding to volumes from bumper harvests around the world.

Strength in the dollar further pressured grains markets. The U.S. currency eased only slightly the day after touching an eight-month high against a basket of currencies.

But news that Turkey downed a Russian warplane lifted gold and provided broad support to commodities markets.

The U.S. winter wheat crop condition was rated 53 per cent good-to-excellent, up from 52 per cent a week ago, the U.S. Department of Agriculture said late on Monday.

This was still below a corresponding 58 per cent rating a year ago but showed the U.S. wheat plants were still benefiting from rainfall after suffering from dryness at the start of the growing season.

“Wheat is heading into dormancy with a really high rating. The only hope that the complex really had was some sort of problem with production,” said Karl Setzer, analyst with MaxYield Cooperative.

Chicago Board of Trade December wheat fell 10-3/4 cents, or 2.2 per cent, to $4.84-1/4 a bushel after climbing 1.6 per cent in the last session (all figures US$).

CBOT December corn dropped three cents, or 0.8 per cent, to $3.64-1/4 a bushel, giving up some of its 1.1 per cent gain in the previous session. A recently narrowing wheat-to-corn price ratio added pressure to corn as wheat prices plunged.

January soybeans closed 1/2 cent lower at $8.63-3/4 a bushel after breaking through chart resistance at their 20-day moving average but failing to hold the gains. The front-month soybean contract hit its lowest level since March 2009 on Monday at $8.44-1/2 a bushel, before having a technical bounce.

Commodity funds sold an estimated net 8,000 corn contracts and 7,000 wheat contracts on the day, but were about even in soybeans, trade sources said.

Futures will not trade on Thursday due to the U.S. Thanksgiving Day holiday, with the market reopening for a shortened trading session on Friday.

Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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