CANBERRA: Chicago wheat futures dropped on Friday and headed for their biggest weekly fall since last September after the US government forecast larger-than-expected inventories as exporters struggle to compete with cheap Russian grain.
Soybean futures edged higher and corn fell, with the US Department of Agriculture (USDA) raising its stock projections for both crops.
“We expect wheat prices to remain depressed this year,” said Dennis Voznesenski, an analyst at Commonwealth Bank in Sydney.
“Growing confidence over rising stocks in the coming marketing year is putting downward pressure on the market.”
The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 1.1% at $5.60-3/4 a bushel by 0406 GMT.
It has fallen 6% so far this week and is nearing September’s three-year low of $5.40.
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CBOT soybeans rose 0.3% to $11.65-3/4 a bushel, but were down around 1.5% for the week. In the previous session, the contract hit $11.60-1/4, its lowest since December 2020.
Corn was down 0.1% at $4.17-1/4 a bushel after touching $4.16-1/2, its lowest since December 2020.
The contract was on track for a weekly loss of nearly 3%.
At its annual outlook forum, the USDA predicted that US wheat stocks would rise to 769 million bushels by the end of the 2024/25 marketing year, up 17% from a year earlier and the most in four years.
The USDA also said US corn stocks would balloon to 2.532 billion bushels by the end of 2024/25, up 17% from 2023/24 and the most since the 1987/88 season.
For soybeans, the agency said ending stocks should climb 38% to 435 million bushels, the highest since 2019/20. The USDA’s forecasts for wheat and soybean ending stocks significantly exceeded analysts’ expectations.
The USDA also said US farmers would plant less corn and more soybeans in 2024 than they did a year earlier and forecast record soybean production of 4.505 billion bushels.
The USDA’s chief economist said US soybeans would face slowing demand from top importer China and steep competition from South America.
Top wheat exporter Russia, meanwhile, expects a third consecutive huge harvest this year, which should maintain the pressure on prices.
US farm incomes are forecast to fall sharply in 2024 for a second consecutive year. Commodity funds have bet heavily that Chicago wheat, soybean and corn prices will fall further and were net sellers of all three again on Thursday, traders said.
The International Grains Council (IGC) raised its forecast for 2023/24 global corn production to a record high, but also lifted its demand estimate.