Supply glut pushes US wheat towards lowest levels since 2020

CANBERRA: Chicago wheat futures on Thursday slid towards their lowest levels since 2020 as supply of cheap Russian grain continued to push down prices and undermine the competitiveness of US crops.

Chicago wheat falls as China cancels more US cargoes

Soybean and corn futures also edged lower amid plentiful supply from the Americas.

Fundamentals

• The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.7% at $5.40-1/4 a bushel, as of 0030 GMT, and nearing Monday’s nadir of $5.23-1/2, the lowest since August 2020.

• CBOT soybeans fell 0.2% to $11.94-1/4 a bushel having hit $11.99-1/4 on Tuesday, its highest since Feb. 8. Corn was down 0.2% at $4.40-1/2 a bushel after climbing to $4.45 on Tuesday, its strongest since Feb. 6.

• Russia, the world’s top wheat exporter, is flooding the global market with cheap supply as it draws down inventories ahead of an expected bumper harvest.

• Refinitiv data show benchmark Russian wheat export prices slipped below $200 a metric ton ($5.44 a bushel) this week for the first time since August 2020.

• Around 500,000 metric tons of US wheat export sales to China have been cancelled in the past week, according to the US government, likely due to the recent slide in prices.

• Farm office FranceAgriMer increased its forecast of French soft wheat stocks this season to a 19-year high due to weakening export prospects.

• Australian farmers are likely to plant more wheat in the coming growing season at the expense of canola, which is forecast to be less profitable, Rabobank said.

• Agricultural maritime exports from Ukraine, a significant wheat and corn exporter, are expected to fall by 20% in March from February, Spike Brokers said.

• Commodity funds were net sellers of Chicago wheat futures on Wednesday, adding to an already significant bearish position, traders said. Speculators are also betting on lower corn and soybean prices.

• For soybeans, Argentina’s Rosario grains exchange bumped up its forecast for the country’s 2023/24 harvest by 500,000 metric tons to 50 million tons after ample rainfall in February.

• Argentina is one of the world’s top two exporters of soybean oil and meal, along with neighbouring Brazil.

• Argentina’s main agricultural area will likely receive more precipitation in the next few days, the Rosario exchange said.

• In Brazil, benchmark industry estimates of the soybean crop have deviated even further from each other this month following a season blemished by questionable weather.

• US farmers meanwhile plan to reduce corn plantings by about 1.2% this year and expand their soybean plantings by about 2.7%, a survey by commodity brokerage Allendale showed.