Wheat at 3-week low as USDA outlook adds to supply pressure

PARIS: Chicago wheat eased to a three-week low on Friday as a US government forecast of record world wheat stocks added to supply pressure from an advancing US harvest and increased crop estimates in Russia.

Corn was little changed as traders weighed the US Department of Agriculture's (USDA) June supply-demand report that increased projected US corn inventories but cut ethanol demand by less than anticipated by some analysts.

Soybeans edged higher as a run of exports to China supported prices and offset the USDA's reduced estimate of US soy exports this season.

Grain markets also found some support in steadier equity and commodity markets, after a day-earlier slide triggered by fears that a fresh wave of coronavirus infections could worsen an economic downturn.

The most active one-month wheat contract on the Chicago Board Of Trade was down 0.8% at $4.95-1/2 a bushel by 0948 GMT. It was near a session low of $4.95-1/4, its weakest since May 18.

"The USDA's crop report has sunk the wheat because it added a hefty amount to their global wheat inventory estimate," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

In addition to raising expected world inventories to a record 316 million tonnes for 2020/21, the USDA increased its outlook for the US harvest and for US stocks.

The start of the US harvest and upward revisions by leading consultancies SovEcon and IKAR to their forecasts for this year's Russian wheat harvest have also curbed wheat prices this week.

But analysts noted that much of the USDA's global supply was accounted for by China and India, and that uncertainty remained over northern hemisphere harvests after dry spells in spring.

"With weather risk remaining, CBOT wheat will likely hold on to its price range for the next four to six weeks," Rabobank said.