U.S. grains: Wheat pressured by ample global stockpiles

Chicago | Reuters — U.S. wheat futures fell to a one-week low on Tuesday, pressured by improving U.S. yield prospects and rising global stockpiles, analysts said, while nearby U.S. corn and soybean futures finished unchanged.

Chicago Board of Trade May wheat settled down 5-3/4 cents at $4.59-1/2 per bushel after dipping to a one-week low of $4.56-1/4.

CBOT May corn ended steady at $3.60 a bushel after setting a contract low at $3.55-1/4, and May soybeans finished flat at $8.98-3/4 a bushel.

Wheat slid after the U.S. Department of Agriculture in a monthly report raised its forecast of global 2018-19 wheat ending stocks to 275.61 million tonnes, topping the highest in a range of trade expectations.

Also bearish, the USDA in a weekly crop progress report late Monday rated 60 per cent of the U.S. winter wheat crop in good to excellent condition, up from 56 per cent a week earlier, a sign of improving yield prospects. Analysts on average had expected no change in weekly ratings.

“If (U.S. winter wheat) ratings continue to improve, we could see July Chicago wheat trade back to $4.40, easily,” said Terry Reilly, senior analyst with Futures International. The July contract settled Tuesday at $4.64.

CBOT corn futures pared losses to end steady after the front three contracts hit contract lows. The market fell after USDA in its monthly supply/demand report raised its forecast of domestic corn stocks at the end of the 2018-19 marketing year to 2.035 billion bushels. The figure was up from 1.835 billion in March and above an average of trade estimates for 1.991 billion.

But corn futures soon erased declines and even turned higher at times as traders covered short positions.

“We knew U.S. corn stocks were going to be higher after the quarterly stocks report … Now that the (monthly) report is out of the way, some people are willing to buy the market because, let’s face it, we’re having less-than-optimal planting conditions out there,” said Jack Scoville, analyst with the Price Group.

A spring snowstorm was forecast to cross parts of Nebraska, South Dakota, Minnesota and Wisconsin starting Wednesday, potentially dumping eight to 16 inches of snow, the Commodity Weather Group said in a client note. Farmers in those areas are trying to prepare fields for the seeding of spring crops including corn.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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