U.S. grains: Wheat plunges most in month on export worries

Chicago | Reuters — U.S. wheat futures plunged 2.4 per cent on Wednesday for their worst losses in a month, pressured by worries that the recent run-up in prices to a two-month high would make supplies from the U.S. less competitive in global markets.

Wheat futures fell to their lows late in the session at the Chicago Board of Trade after rumours circulated that Argentina approved 500,000 tonnes of wheat for export.

The rumour — confirmed after the close of trading by Reuters — stoked fears that Brazil would buy wheat from Argentina instead of the U.S., said Austin Damiani, analyst at Frontier Futures in Minneapolis.

“That would further reduce prospects; we’ve rallied away from export demand,” Damiani said.

CBOT March wheat ended 15 cents lower at $6 per bushel and has shed more than three per cent since hitting a two-month high last week (all figures US$). Prices declined for the second straight day in the wake of an announcement on Tuesday that top wheat importer Egypt canceled a purchase of two cargoes of U.S. wheat.

“We’ve exhausted buying interest and there’s concerns that we could be pushing demand away from the market, especially on the export side,” Jefferies Bache analyst Shawn McCambridge said of wheat futures.

“We could get a disappointing number tomorrow. End users are not willing to chase the market higher,” McCambridge added, referring to the U.S. Agriculture Department’s weekly grain export data release due early on Thursday.

Egypt’s main wheat buying agency announced a tender seeking 55,000 tonnes or more of wheat. Results are expected on Thursday. The agency purchased wheat from Russia and the U.S. in its last tender in January.

Corn lower, soy higher

Corn futures also were pressured late in the session, reversing what had been modest gains, with March corn finishing 1/4 cent lower at $4.55-1/2.

Soybeans for March delivery closed up 8-1/4 cents at $14.07-1/4, near the day’s highs and at the highest levels since mid-September, supported by rain delays to the harvest in Brazil.

Brazil’s crushing association, Abiove, is standing by its forecast for a record crop of 88.6 million tonnes despite concerns over heavy rain in top growing state Mato Grosso and dry weather in No. 2 growing state Parana.

But the association, which added one million tonnes to its 87.6 million tonne forecast on Feb. 19, doesn’t expect to raise it further, Abiove CEO Carlo Lovatelli told journalists.

U.S. soy cash prices remained firm, however, following USDA’s announcement on Tuesday that exporters sold 568,000 tonnes of beans to an unknown destination — a sale that caught many traders by surprise.

“Despite this time of the year when overseas buyers should be eyeing the South American record harvest, the focus is still on U.S. soybeans supplies,” said Vanessa Tan, investment analyst at Phillip Futures, in a market note.

“This is because South America is dealing with harvest delays of the region’s record-large crop.”

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Colin Packham in Sydney.


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