Chicago | Reuters — Chicago wheat futures hit a two-month low on Tuesday, pressured by improving U.S. winter wheat crop ratings, strong export competition and rising estimates of Australia’s harvest, analysts said.
Corn and soybean futures also sagged, retreating from early strength as traders focused on forecasts for welcome rains in South American crop regions.
Chicago Board of Trade March wheat settled down 7-3/4 cents at $5.77-1/4 per bushel, after dipping to $5.74, the contract’s lowest since Oct. 2 (all figures US$).
CBOT March corn ended down 5-1/4 cents at $4.20-3/4 a bushel and January soybeans ended down 6-1/2 cents at $11.62 a bushel.
Wheat futures retreated from early advances as traders questioned export interest in U.S. supplies.
“Demand for wheat out of the U.S. is not good. We actually had a really good export sales report last week … but until you start to see that consistently, I don’t know that the market is going to get overly excited,” said Joe Vaclavik, president of Standard Grain brokerage.
Underscoring global competition from suppliers in the Black Sea region, Egypt’s main state grains buyer purchased 170,000 tonnes of Russian and Ukrainian wheat in an international purchase tender. No U.S. wheat was offered.
Meanwhile, the U.S. Department of Agriculture late Monday rated 46 per cent of U.S. winter wheat in good to excellent condition, up from 43 per cent a week earlier, bucking trade expectations for no change.
However, ratings were down from a year earlier, reflecting drought in much of the U.S. Plains breadbasket as the crop enters winter dormancy.
Traders were still digesting news that the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) raised its estimate of the country’s 2020-21 wheat harvest to 31.17 million tonnes, from its September forecast of 28.91 million.
“(The) Australian crop keeps getting bigger and ABARES needs to add another 2 million tonnes to their estimate,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney.
CBOT corn and soybeans fell on fund-driven liquidation and improving crop weather in Brazil and Argentina.
“Brazil is going to catch some rain. It’s not going to be as much as they would normally see this time of year, but it’s not going to be a full-blown drought, either,” Vaclavik said.
StoneX, a commercial grain brokerage, raised its forecast of Brazil’s 2020-21 soybean crop to 133.9 million tonnes from 133.4 million previously.
Commodity funds hold sizable net long positions in CBOT corn and soybean futures, leaving both markets prone to bouts of long liquidation as the calendar year winds down.
— Reporting for Reuters by Julie Ingwersen in Chicago; additional reporting by Sybille de La Hamaide in Paris and Naveen Thukral in Singapore.