US wheat futures fall as demand slows

Chicago wheat futures extended the prior session's losses on Tuesday as investors' appetite for the commodity waned on signs of slowing demand and due to the escalating conflict in Libya. Soyabeans and corn prices also eased. Dealers said there were concerns that a rise in oil prices driven by the crisis in Libya may stall economic recovery in the United States and elsewhere while current high prices appeared to be starting to curtail demand for wheat.
An improved crop outlook in the US also weighed on the wheat futures. Rain and snow in the US Plains this week are likely to ease stress on the winter wheat crop, which has been suffering from drought, although the driest spots will see little relief, a forecaster said.
"The main thing that we see is that investor demand in wheat has moderated...The important thing is that the wheat crop is going to see improvement in supply in 2011," said Abah Ofon, an agricultural commodities analyst at Standard Chartered Bank. Chicago Board of Trade May wheat fell 1.0 percent to $7.92-3/4 a bushel by 1233 GMT. CBOT May corn lost 0.7 percent to $7.12-1/2 a bushel and May soyabeans fell 0.8 percent to $13.83-3/4 per bushel.
EXPORTS SLOW The US Agriculture Department (USDA) reported wheat export inspections of 21.44 million bushels on Monday, near the low end of forecasts, which the trade viewed as evidence that export demand for US supplies would slow after a surge in February.
Wheat futures in Paris also eased with May off 6.25 or 2.6 percent at 233.50 euros a tonne. "The market has lost its ability to spring back," one French trader said, adding a lack of major new demand was helping to cool prices. Soyabeans were weighed by an improving outlook for crops in South America and expectations that the US Department of Agriculture later this week will raise its forecast of ending stocks for the first time in 11 months.
Informa Economics on Friday raised its estimate for 2010/11 Brazilian soya production to 71.4 million tonnes from its previous outlook for 69.3 million. Argentine soya production was pegged by Informa at 52.0 million tonnes, up from the previous outlook for 49.0 million.
"I don't think soyabeans are in same position as corn where stocks are incredibly tight," said Ofon. "We are seeing crops in Latin America improving and that was the main concern, now there have been good rains in Brazil and Argentina." The USDA is expected to raise its forecast of US soyabean ending stocks, due a slowdown in domestic usage. The USDA has cut its estimate or left it unchanged each month since it released its first forecast of 2010/11 soya ending stocks last May. Corn prices eased on spillover selling from wheat and soyabeans although the market continued to be underpinned by strong demand chipping away at the US stockpile, dropping the ending supply for 2010/11 to the lowest in 15 years. The USDA was scheduled to release its March supply/demand reports on Thursday.