U.S. grains: Wheat drops on poor exports

U.S. wheat futures fell more than one per cent to a one-week low on Thursday on slow U.S. export sales of wheat and a larger-than-expected Canadian crop.

Wheat tumbled for the second day in a row, and at 1.5 per cent, posted its biggest one-day decline in over two months.

European wheat futures, which hit a near seven-month high on Wednesday, tracked U.S. prices lower.

Corn fell for the first time in four days as a short-covering bounce from a three-year low petered out, while soybeans also eased.

“The weather in South America continues to be non-threatening so that I think is having some impact on the soybean market as well,” said Don Roose, analyst and president of U.S. Commodities at Des Moines, Iowa.

All three commodities were pressured by lower-than-expected exports of each as seen in the U.S. Department of Agriculture’s weekly export sales report, which was released on Thursday.

Wheat declined despite the potential for some winterkill damage to the U.S. winter wheat crop late this week as bitter cold temperatures and ice threatened to harm some of the crop in the U.S. Plains and in the U.S. southern Midwest.

“There may be some winterkill in the Plains but I don’t think it’s a major problem. A bigger issue will be the ice cover from northeast Texas into the Delta,” said Don Keeney, a meteorologist at MDA Weather Services.

Chicago Board of Trade December wheat closed down 9-1/4 cents per bushel at $6.38 per bushel, December corn was down 2-3/4 at $4.22-3/4, and January soybeans were down 1-1/2 at $13.28 (all figures US$).

Although grains and soy ended lower the closing prices were above the day’s lows due to a weak dollar and slow country movement.

“Part of it is probably the (weakness in the) dollar,” said Jack Scoville, analyst for the Price Futures Group.

“And I don’t think there is much for sale right now. Farmers are pretty tight holders,” he said.

“Once it gets put in the bin and the temperatures drop into the 20s (F), and to the south they are going to get a couple inches of ice, who wants to go out and open a bin door, fill a truck and take it into town?,” Scoville said.

Big Canadian wheat crop

“The big news in wheat was the (Statistics Canada) production figure (…) and I think this is driving the movement today,” said Brett Cooper, senior manager, markets, at FCStone Australia.

Statistics Canada said on Wednesday that farmers produced a record 37.53 million tonnes of wheat in 2013, up 38 percent from 2012 and well above market expectations.

The estimates dampened a rally in wheat that had been driven by strong export demand at a time of fading competition from Russia and Ukrainian supply, as well as worries over freezing weather forecast this week in the U.S. wheat belt.

In Europe, March milling wheat on the Paris Euronext market was down 0.7 per cent at 211.50 euros a tonne as it pulled away from a near seven-month high of 211.25 euros hit on Wednesday.

Corn remains within sight of a three-year low of $4.10 for front-month prices that was hit on Monday as the market faces the arrival of a record U.S. harvest and China’s rejection of some cargoes of U.S. corn.

China confirmed on Wednesday it had rejected the entry of five U.S. shipments tainted with a non-authorized genetically modified strain, and analysts said the move could be a sign of a tougher Chinese line on imports.

— Sam Nelson reports on grain and oilseed futures markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Gus Trompiz in Paris and Colin Packham in Sydney.

Related story:
StatsCan shows shockingly large crops all around, Dec. 4, 2013

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