U.S. grains: Wheat tumbles on profit-taking

Chicago | Reuters — U.S. wheat futures plunged more than four per cent on Monday on profit-taking and improving weather in some key wheat producing areas amid concerns that increasing global supplies will restrict U.S. wheat export demand.

Corn futures fell for a third straight session and hit a two-month low on spillover pressure from wheat and on lacklustre export sales. Soybeans were narrowly mixed as traders squared positions ahead of a monthly U.S. Department of Agriculture monthly supply and demand report on Tuesday.

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“Today, profit taking was the feature ahead of the USDA report,” said Terry Reilly, senior commodities analyst with Futures International.

Chicago Board of Trade December soft red winter wheat tumbled 21-1/2 cents, or 4.1 per cent, to $5.01-3/4 a bushel, the contract’s steepest drop in seven months (all figures US$). Selling accelerated as the contract fell below its 100-day moving average.

CBOT December corn fell 6-1/4 cents, or 1.7 per cent, to $3.66-3/4 a bushel, its lowest point since Sept. 11. Losses were limited by heavy liquidation of wheat/corn spreads after December wheat’s premium to December corn recently swelled to more than $1.50 a bushel, a four-month high.

Commodity funds sold an estimated net 12,000 CBOT wheat contracts and 11,000 corn contracts on the day.

January soybeans ended a penny lower at $8.66-1/4 a bushel.

The dollar index surged to its highest in more than six months on Friday, following U.S. jobs figures that fuelled expectations of an interest rate rise next month.

The dollar eased back slightly on Monday after surging last week to a six-month high against a basket of currencies, giving some respite to U.S. crop commodities fighting for export demand in a well-supplied world market.

The market’s focus is turning to Tuesday’s monthly USDA supply and demand reports. Analysts expect the government to slightly raise its U.S. corn and soybean production and ending stocks forecasts and possibly trim some corn demand figures, particularly exports.

U.S. corn export sales are lagging last year’s pace by more than 30 per cent, weighed down by a strong dollar and abundant global supplies. The USDA on Monday said just 295,701 tonnes of corn were inspected for export last week, well below the range of trade expectations for 475,000 to 600,000 tonnes.

Soybean exports, however, have been less disappointing, with sales to date lagging the year ago pace by 22 per cent and amid a steady stream of daily sales announcements.

USDA on Monday reported new sales of 126,000 tonnes of U.S. soybeans to unknown destinations.

Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.

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