U.S. grains: Wheat falls on Southern Hemisphere harvest

Chicago | Reuters — U.S. wheat futures fell on Thursday for a sixth straight session, pressured by the expanding harvest of crops in the Southern Hemisphere that should add to plentiful global grain stockpiles, analysts said.

Corn futures fell on disappointing weekly U.S. export data and soybeans posted modest declines.

The most-active March wheat contract on Chicago Board of Trade settled down 7-1/4 cents at $3.95-1/2 per bushel after falling below psychological support at the $4 mark and notching a contract low at $3.93 (all figures US$).

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CBOT March corn ended down six cents at $3.42-1/2 a bushel after setting a two-month low at $3.41-3/4, and January soybeans finished down 2-1/2 cents at $10.29-3/4 a bushel.

Wheat futures appeared to attract a fresh round of fund selling, even though commodity funds already hold a large net short position. Traders noted expectations of a record-large crop in Australia.

“Talk of Southern Hemisphere harvest crashing world prices was the fundamental catalyst,” ED+F Man Capital analyst Charlie Sernatinger wrote in a note to clients.

Also bearish, the CME Group, parent of the CBOT, reported 901 deliveries against the December futures contract and 810 deliveries against K.C. December hard red winter wheat futures.

Heavy deliveries tend to reflect weakness in the cash market, which makes delivery against futures a better sale for commercial grain firms.

Corn followed wheat down, with lower-than-expected weekly U.S. export sales adding pressure. The U.S. Department of Agriculture reported export sales of U.S. corn in the latest week at 761,600 tonnes, below a range of trade expectations.

Soybeans sagged on expectations for a slowdown in export demand for U.S. supplies, along with generally favourable South American crop weather.

USDA reported weekly U.S. soybean export sales at 1,399,000 tonnes, at the high end of a range of trade estimates. Some analysts, however, believe top global soy buyer China will soon begin shifting purchases to South America as the Brazilian and Argentine crops develop.

“I continue to hear reports that our best buyer, China, is buying more and more out of Brazil,” said Tom Fritz, a partner with EFG Group in Chicago.

A Reuters survey projected Brazil’s 2016-17 soybean crop at a record 103.1 million tonnes, surpassing last season’s harvest by 7.6 million tonnes.

CBOT soyoil futures bucked the weak trend in grains and rose to contract highs, led by strength in crude oil. Soyoil is linked to energies due to its use as a headstock for biodiesel fuel.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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