Wheat approaches four-month low on abundant global supplies

HAMBURG: US wheat futures fell on Tuesday, with hefty global supplies pushing prices towards their lowest in almost four months, while soybeans and corn both dropped as the U.S.-China trade war heated up.

The Chicago Board of Trade's most active wheat contract was down 0.7% at $4.59-1/4 a bushel by 1117 GMT. The contract earlier hit $4.58-1/4, the lowest for a most-active contract since May 16.

U.S. markets were closed for a public holiday on Monday. The most active wheat contract had fallen 2.4% on Friday and U.S. spring wheat futures tumbled to a 10-year low on mounting concern over competition as buyers were sought for big global harvests.

The most active corn contract fell 0.3% to $3.68-1/4 a bushel and soybeans dropped 0.3% to $8.66 a bushel.

Black Sea wheat harvests, including Ukraine and Russia, are moving into global markets while the European Union an other regions have achieved larger crops this summer after crops suffered from drought in 2018.

"Wheat prices are softer today because of the outlook for large global supplies," said Michael Magdovitz, senior agriculture commodities analyst at Rabobank. "Large harvests in the Black Sea region and European Union need to be exported.

"U.S. wheat faces heavy competition in world markets and restrained import demand. Importers have been moving towards hand-to-mouth purchasing to take full advantage of the downward trend in prices."

Corn is down as U.S. crop conditions stabilise and the weather risk premium deteriorates, Magdovitz added.

"The U.S. corn crop seems to have avoided major damage from the poor spring weather," he said. "Meanwhile, the export market remains highly competitive."

Magdovitz  also noted that world agricultural supply and demand estimates are due from the U.S. Department of Agriculture (USDA) next week, carrying the potential for a cut in yield expectations.

The U.S-China trade war showed no signs of ending in the near term, continuing to hit U.S. soybean exports to China.

"Grain traders were concerned about the escalating trade war between the U.S. and China as new tariffs began on both sides this weekend," the Allendale brokerage said.

The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday as China put new duties on U.S. crude.