Wheat posts steepest drop since August as virus fears slam markets

• Soybeans fell more than 2%, the most in 2-1/2 weeks, and most corn contracts posted fresh life-of-contract lows as worries over burdensome supplies weighed on prices.

CHICAGO: US wheat prices fell more than 3% on Wednesday as coronavirus fears dragged down equities markets and lifted the dollar, sending Chicago wheat futures to their steepest decline in 7-1/2 months.

Soybeans fell more than 2%, the most in 2-1/2 weeks, and most corn contracts posted fresh life-of-contract lows as worries over burdensome supplies weighed on prices.

News that President Donald Trump extended coronavirus emergency measures through the end of April drove wheat lower, despite recent strong demand from flour millers and global importers.

A firmer U.S. dollar against a basket of currencies added pressure to grains, as it makes dollar-denominated commodities costlier for holders of other currencies.

"Wheat consumption has been very good lately, so it's surprising to see the wheat market getting beat up as bad as it is," said Jack Scoville, analyst at the Price Futures Group. "People are stocking up. While that will eventually pass, I'm not too sure it's passed yet."

Chicago Board of Trade (CBOT) May wheat dropped 18-1/2 cents to close at $5.50-1/4 a bushel. The 3.25% drop was the largest for a most-active contract since Aug. 12.

May soybean futures settled down 23-1/4 cents to $8.62-3/4 a bushel.

After falling to within 1-1/2 cents of a contract low, May corn ended down 6 cents at $3.34-3/4 a bushel, extending prior-session losses fueled by a larger-than-expected U.S. plantings forecast from the U.S. Department of Agriculture (USDA). All other corn contracts either matched previous contract lows or set new ones.

Corn has been hammered by falling energy markets as demand from ethanol producers, which consume more than a third of the U.S. crop, has plunged.

The U.S. Energy Information Administration on Wednesday said ethanol output fell by 165,000 barrels per day in the past week to 840,000 bpd.

The USDA surprised the corn market on Tuesday by projecting 2020 U.S. plantings at 97 million acres, well above an average trade estimate of 94.3 million in a Reuters poll prior to the report.

The agency pegged soybean plantings at 83.510 million acres, below market expectations.

After drawing support in recent days from concerns that the coronavirus epidemic would disrupt supplies of soy from South America and palm oil from Malaysia, oilseed markets focused on the threat to demand.

Oilseeds are reliant on demand for vegetable oils from now-shuttered restaurants in some countries and from biodiesel producers.