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

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– U.S. wheat futures closed lower on Monday amid plentiful global inventories and poor export demand for U.S. supplies, traders said.

Corn and soybeans also fell as macroeconomic worries hung over the market and on some forecasts for much-needed rains in Argentina next week.

At the Chicago Board of Trade, March wheat ended four cents lower at $4.75-1/4 per bushel (all figures US$).

March corn settled down 3/4 cent at $3.71-1/4 per bushel and March soybeans settled down 1-1/2 cents at $8.80-3/4 a bushel.

Wheat sagged on a lack of follow-through after a short-covering rally lifted futures on Friday, the last trading day of the month.

“The bottom line is, world competition for wheat (exports) continues to be pretty stiff, and we are not getting any,” said Tom Fritz, a partner with EFG Group in Chicago.

After the CBOT close, Egypt’s main state wheat buyer, the General Authority for Supply Commodities (GASC), set a tender to buy an unspecified amount of wheat from global suppliers for shipment from March 2-11. U.S. wheat has not been offered in recent GASC tenders. Results were expected on Tuesday.

Over the weekend, GASC rejected a cargo of French wheat because it did not comply with new import rules, a move that pressured European grain futures.

Traders were still digesting news that Russia, one of the world’s largest wheat exporters, likely would not change its current regime of grain export taxes.

Concerns over the possibility of tougher limits on Russia’s foreign sales of wheat had sent global prices to a one-month high last week.

And a winter storm brewing in the U.S. Plains was forecast to blanket the region’s winter wheat with an insulating layer of snow ahead of a cold spell late this week.

CBOT soybeans and corn fell on technical selling and spillover weakness from crude oil and world equity markets.

The U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report showed that noncommercial traders slashed their net short position in CBOT corn in the week to Jan. 26. Some observers viewed the data as a signal that short-covering rallies may have stalled for the time being.

“Traders are running out of reasons to cover their short positions, and have no real reason to even consider buying,” said Karl Setzer, an analyst with the MaxYield Cooperative in West Bend, Iowa.

Forecasts for improving weather in South America, including rains expected in dry areas of Argentina, added to bearish sentiment.

A record soybean crop is expected in Brazil in early 2016 despite some recent cuts in harvest forecasts.

Justin Madden and Julie Ingwersen report on crop commodity markets for Reuters from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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