U.S. grains: Wheat falls to multimonth lows as global prices sag

CBOT March 2019 wheat futures with 20- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. wheat futures fell to multimonth lows on Friday, despite broad strength in commodity and equity markets as grain traders monitored bearish technical signals as well as falling prices in the global cash wheat market.

Soybeans climbed on optimism about U.S. trade negotiations with China, the world’s top soy importer, while corn futures were little changed.

U.S. markets, including the Chicago Board of Trade (CBOT), will be closed on Monday in observance of the Presidents Day holiday.

CBOT March wheat settled down 2-3/4 cents on Friday at $5.04-1/4 per bushel, after earlier falling as low as $4.99-1/4, the contract’s lowest level in over a year and the lowest for a most-active contract since Oct. 31 (all figures US$).

Technical selling accelerated as March wheat fell below its Jan. 2 low of $5.01-1/4 and as K.C. hard red winter wheat futures hit contract lows.

CBOT March soybeans ended up 4 cents at $9.07-1/2 a bushel while March corn finished flat at $3.74-3/4 a bushel.

Wheat fell on indications of declining prices on the global export market. Algeria’s state grains agency this week bought 600,000 tonnes of milling wheat at a tender at around $247-$247.50 per tonne, cost and freight included, European traders said. That was about $15 per tonne cheaper than an Algerian purchase in early January.

“World wheat cash values have come off their highs. French offers had to come down to get the Algerian business,” said Terry Linn, analyst with Linn + Associates.

“Domestically, all we had was the export sales report, highlighting very tepid demand,” Linn said, noting the U.S. Department of Agriculture’s Thursday report pegging U.S. old-crop wheat sales in the week to Jan. 3 at 131,200 tonnes, below trade expectations.

Euronext wheat futures led the way downward, with the benchmark May contract hitting its lowest level since July on technical selling ahead of March options expiration.

CBOT soybeans turned up after the March contract briefly dipped to a 3-1/2-week low. The soy market drew support as both the U.S. and China reported progress in five days of trade negotiations in Beijing this week.

The talks will resume next week in Washington with time running short to ease the bruising trade war between the world’s two largest economies, but U.S. President Donald Trump repeated that he may extend a March 1 deadline for a deal and keep tariffs on Chinese goods from rising and said the talks “are going extremely well.”

The upbeat assessment boosted Wall Street and added light support for grains and oilseeds.

“The overall negotiations picture is a little more positive,” Phin Ziebell, agribusiness analyst at National Australia Bank, said of the trade talks.

Soybeans also drew support from a larger-than-expected January crush figure. The National Oilseed Processors Association said its member crushed 171.6 million bushels of soybeans last month, down slightly from December’s 171.8 million, but above the average analyst estimate of 169.6 million.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz and Naveen Thukral.

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