CANBERRA: Chicago wheat on Wednesday shed some gains from the previous session as plentiful supply and falling Russian export prices weighed on market sentiment, pushing US futures towards multi-year lows.
Russian wheat export prices fall
Corn and soybean futures also dipped and were close to their lowest levels since December 2020.
Fundamentals
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The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.4% at $5.76-3/4 a bushel by 0146 GMT, after surging 3.3% on Tuesday.
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Traders attributed Tuesday’s rally to a bout of short-covering, triggered by a weakening dollar, which makes US farm products more affordable for importers, and anticipation that Washington may impose new sanctions on Russia.
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Despite the rally, CBOT wheat has lost around 8% so far this year and hovered near September’s three-year low of $5.40.
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CBOT soybeans were down 0.3% at $11.75-1/2 a bushel and traded near last week’s low of $11.60-1/4, while corn fell 0.2% to $4.18 a bushel, just above Tuesday’s low of $4.14-3/4.
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Ample supply of Russian wheat, Brazilian soybeans and US corn have pushed down prices, with the US government last week forecasting a sharp increase in US-ending stocks.
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Commodity funds have built large net short positions in wheat, soybeans and corn, leaving them prone to short-covering rallies. Funds were net buyers of all three on Tuesday, traders said.
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Analysts said Russian wheat export prices continued to fall last week, maintaining pressure on the market.
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Soft wheat exports from the European Union since the start of the 2023/24 season in July had reached 19.90 million metric tons by Feb. 13, EU data showed.
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Ukraine’s combined grain and oilseeds exports rose to 3.1 million metric tons in Feb. 1-15 from 2.2 million tons in the same period in January, the Ukrainian traders’ union UGA said.
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In soybeans, consultants Agroconsult downgraded its harvest estimate for Brazil’s 2023/2024 season to 152.2 million metric tons from 153.8 million tons.
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Hot and dry conditions during the growing season hit soybean yields but Brazil’s harvest will still be large by historical standards and other south American producers such as Argentina expect bumper crops.
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By last Thursday, 32% of Brazil’s planted soybean area had been harvested , according to consultants AgRural, up 9% from a week earlier and ahead of last year’s pace.
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The US Department of Agriculture confirmed private sales of 155,000 metric tons of new-crop US corn to Japan and 228,000 tons of old-crop US soymeal to the Philippines.
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The US government will approve a request from a group of Midwest governors to allow year-round sales of gasoline with higher blends of ethanol, but will push the start date into next year, sources said.
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