U.S. grains: Wheat retreats from rally fuelled by Russia export worries

Chicago / Reuters – U.S. grain and soybean futures slumped on Wednesday, with wheat dropping by 4 per cent in a setback from a rally fuelled by concerns over Russian export restrictions.

The market extended a retreat from gains last week amid talk that Russia, expected to be the world’s fourth-largest exporter this year, won’t impose grain export duties until Feb. 1 and that the curbs may be less severe than previously thought, traders said.

Russian officials are considering a duty of $50 per tonne on exports, or 20 per cent of the value, several trade sources told Reuters, adding that there was no final decision yet. None of the sources were directly involved in the official discussions.

Last week, wheat futures touched a seven-month high on fears that the restrictions would tighten global supplies. Moscow on Monday stiffened its bid to curb grain exports with plans for an imminent duty on shipments.

A spokeswoman for Russian Deputy Prime Minister Arkady Dvorkovich, who had promised to prepare the proposal for an export duty, declined to comment on Wednesday.

“We’re continuing to see profit-taking,” Brian Hoops, president of U.S. brokerage Midwest Market Solutions, said of the decline in futures prices.

Chicago Board of Trade March wheat unofficially ended down 25-1/4 cents at $6.10-1/4 a bushel after hitting a session low of $6.06-1/4, the lowest price for a front-month contract since Dec. 15.

Egypt, the world’s largest wheat importer, said it would not be affected by any Russian ban on wheat exports because it has alternative sources of supply. Moscow has not officially notified Egypt’s state wheat buyer that it will be unable to supply wheat for January delivery as a result of export curbs, a senior Egyptian official said.

The head of Russia’s Grain Union said earlier that Russia may fail to supply wheat to Egypt’s state buyer GASC in January as its exports have been effectively suspended by informal government curbs.

“We don’t know exactly what the fundamental situation is with Russia,” Hoops said.

CBOT March soybeans unofficially closed down 10 cents at $10.28-1/2 a bushel, and March corn was unofficially down 5-3/4 cents at $4.08-1/4 a bushel.

 Prices at 12:08 p.m. CST (1808 GMT)                          
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  408.25    -5.75  -1.5%   -3.3%
 CBOT soy                  1028.50   -10.00  -1.0%  -21.6%
 CBOT meal                  371.00    -0.30  -0.1%  -15.2%
 CBOT soyoil                 32.01    -0.21  -0.8%  -17.7%
 CBOT wheat                 610.25   -25.25  -3.9%    1.0%

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