Saturday, 01 December 2012 05:20
CHICAGO: US wheat futures plunged more than 2 percent on Friday and are on track to post their largest monthly decline in a year as weak US exports and large deliveries fueled selling following the run-up in prices earlier in the week.
End-of-the-month liquidation put added pressure on wheat.
Soybeans were on track for their third straight monthly decline and corn its second straight drop as traders took profits and November came to a close.
"We're seeing some end-of-the-month liquidation. They (traders) generally don't like piling on a position into December that could disrupt year-end profits," said Allendale Inc analyst Rich Nelson.
Wheat futures were still positioned for a modest weekly gain. Higher prices earlier this week helped chill demand for US supplies, while exports last week were the smallest in three weeks.
"We rallied the market up on anticipation of export demand and we rallied away from the export price," Charlie Sernatinger, analyst at ABN Amro in Chicago, said of the wheat.
Shrinking supplies in the Black Sea region, the cheapest wheat in the world, were expected to prompt more demand for US wheat, but the buying has yet to materialize.
Large wheat deliveries posted on first notice day against Chicago Board of Trade December wheat futures also weighed. The CBOT said 2,119 wheat contracts were issued for delivery, more than double the average trade estimate.
CBOT December wheat fell 23 cents to $8.46-1/4 per bushel, while most-active March shed 20-1/2 cents to $8.65 as of 12:17 p.m. CST (1817 GMT).
Wheat futures were on pace to decline about 6 percent for the month, the largest monthly decline on a continuous chart since falling more than 15 percent in October 2011.
Talk that top global soy buyer China bought soybeans from Brazil also weighed on the CBOT soy complex.
"The rumor is that China bought three cargoes from Brazil for February. That means they are not buying from the US," Sernatinger said.
Soybeans for January delivery eased 16-1/2 cents, or 1.1 percent, to $14.31-1/2 per bushel while March corn fell 8-1/4 cents to $7.50-1/2, with losses capped by commercial buying at the lows, traders said.
"We have some lingering concerns over those export sales from yesterday," Nelson said. "It also suggests that corn and bean sales could increase in the coming (weekly export sales) report."
US export sales of soybeans, wheat and corn last week were the smallest in three weeks, with each missing traders' expectations, US Agriculture Department (USDA) data showed on Thursday.
"A higher figure had been anticipated given the dwindling supply in the Black Sea region," Commerzbank said in a market note on Friday.
"The increased price level is clearly leaving its mark on demand for US wheat, though the same cannot be said of EU wheat, which actually saw exports increase this week to 438,000 tonnes," the report added.
Copyright Reuters, 2012