US wheat falls

US wheat futures fell 1.4 percent on Thursday, adding to the 5 percent slump a day earlier, stemming from the US government raising its supply forecast for the grain. Soyabeans rallied for the fourth straight session on support from firm cash markets as well as some end user buying, shrugging off customs data showing China's imports of soyabeans fell 11 percent in September from a year ago.
Corn futures weakened as the US government confirmed the sale of 900,000 tonnes of US corn to China, that country's second largest purchase of US corn in one day. Traders had rallied corn prices the 40-cent daily limit on Tuesday amid rumours of the purchase. So with the sale priced into the market, the trading credo "buy the rumour, sell the news" held true.
There was also pressure on corn from Wednesday's US Department of Agriculture monthly supply-demand data that raised ending stocks nearly 29 percent from a month ago and reduced exports by 50 million bushels. "There was nothing supportive in yesterday's USDA numbers so there is a little bit of a hangover from that here today," said Karl Setzer, analyst with MaxYield Co-operative. Chicago Board of Trade December wheat ended down 8-3/4 cents at $6.18 a bushel and CBOT December corn fell 2-1/2 cents to $6.38-1/4 a bushel.
CBOT November soyabeans gained 17-1/2 cents to $12.57 a bushel with additional support coming from soyabean/corn spreading. Wheat's 6.4 percent decline during the past two days was the biggest two-day drop in 3-1/2 months. The plunge erased most of a 49-1/4 cent gain on Tuesday that traders attributed to short covering ahead of the USDA report.
US commodities were generally weaker on Thursday on pressure from a firm US dollar. Gold and crude oil markets sagged after the European Central Bank warned that write-downs on government debt could damage the region's banking system. Wheat's fall was sparked Wednesday morning when the USDA boosted its domestic wheat stocks outlook by 10 percent and raised its world supply view by 4 percent in its monthly crop report. USDA's confirmation on Thursday of the corn sale China came one day after China said it was buying 1.5 million tonnes of the grain. There was an additional 292,110 tonnes of U.S corn sold to unknown destinations, USDA said.