U.S. grains: Wheat sags on abundant global supplies

MGEX September 2019 spring wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Chicago Board of Trade (CBOT) soft red winter wheat futures fell to three-month lows on Tuesday while U.S. hard wheat futures hit their lowest levels in a decade, pressured by ample world supplies and strong export competition, analysts said.

Corn futures fell to life-of-contract lows on mild crop weather that bolstered confidence in U.S. harvest prospects, and soybean futures followed the weaker trend.

Benchmark CBOT December soft red winter wheat settled down nine cents at $4.53-1/2 per bushel (all figures US$).

Front-month K.C. hard red winter wheat dipped to $3.61-3/4 a bushel, the lowest spot price on a continuous chart since December 2005. And Minneapolis Grain Exchange September spring wheat settled at $4.66-1/2, the cheapest spot spring wheat price on a continuous chart since September 2009.

Hard red winter wheat is grown in the southern U.S. Plains and typically milled into flour for bread. Hard red spring wheat, grown in the northern Plains and traded in Minneapolis, is a top-quality grain used for pizza dough and bagels, and often blended with lesser grades of wheat to improve flour quality.

All three wheat markets sagged on prospects for plentiful global stockpiles.

“The wheat market is searching for demand. We have large crops not only in Ukraine but in Europe, Russia. And end-users, at least near-term, have reasonably good coverage,” said Rich Feltes, vice president for research with R.J. O’Brien.

“Importers have been moving towards hand-to-mouth purchasing to take full advantage of the downward trend in prices,” said Michael Magdovitz, senior agriculture commodities analyst at Rabobank.

CBOT corn futures fell as forecasts called for mild Midwest temperatures and few signs of frost that could hurt late-maturing crops.

“We may have a delayed-harvest crop; we may have a lower quality crop. But we are going to have a crop. That is the message,” Feltes said.

CBOT December corn settled down 8-3/4 cents at $3.61 a bushel after setting a contract low at $3.60-1/2. November soybeans ended down 1/2 cent at $8.68-1/2 a bushel.

After the CBOT close, the U.S. Department of Agriculture rated 58 per cent of the U.S. corn crop in good to excellent condition, up from 57 per cent the previous week and in line with trade expectations. USDA said six per cent of the crop was mature, behind the five-year average of 13 per cent.

Concern about the U.S. trade row with China, the top global soybean buyer, also hung over the futures market, as new tariffs on Chinese goods went into effect over the U.S. Labour Day weekend.

U.S. and Chinese negotiators are due to meet in person in Washington this month, but no date has yet been set.

President Donald Trump warned he would be “tougher” on Beijing in a second term if trade talks dragged on, compounding market fears that ongoing trade disputes could trigger a U.S. recession.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Colin Packham in Sydney.

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