U.S. grains: Wheat, corn, soy fall on global supply pressure

Chicago | Reuters –– Chicago Board of Trade wheat, corn and soybeans fell on Wednesday as traders grappled with huge world stocks of all three commodities.

Grain and oilseed prices edged higher during the overnight session but traders quickly locked in profits from the mild spikes amid the bearish global balance sheet. Wheat futures fell the most, dropping 1.9 per cent. Corn lost 1.7 per cent and soybeans shed 0.4 per cent.

“Like the other grains, there is not much happy happening in the wheat on the upside now,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a note to clients. “The export demand is horrible, the cash markets are heavy… and now the charts are turning their momentum down.”

Prospects for increased competition for exports added to the bearish tone hanging over the market. Argentina will announce a much-anticipated relaxation of currency controls on Wednesday, the government said, setting the stage for a weakening of the local peso and an increase of soybean shipments from the world’s No. 3 exporter.

“There is just no real strong enthusiasm for buying in,” said Bill Gentry, a broker at Risk Management Commodities in Lafayette, Indiana.

CBOT January soybean futures, which hit a three-week low during the session, settled down 4-3/4 cents at $8.62-1/2 a bushel (all figures US$). The market gave up its overnight gains and turned lower after the January contract hit resistance at its 30-day moving average.

Weakness in the crude oil market added to the pressure on soybeans. Oil prices were trending near multi-year lows.

CBOT March corn ended 7-1/2 cents lower at $3.69-3/4 a bushel and CBOT March wheat dropped 10-3/4 cents at $4.83-1/2 a bushel.

A weekly U.S. government report that showed ethanol inventories rising to their highest since mid-June weighed on the corn market. The Energy Information Administration said ethanol stocks rose by 493,000 barrels to 20.32 million.

The U.S. Federal Reserve on Wednesday afternoon raised interest rates for the first time since 2006. The move was widely expected but was seen as a negative for commodities markets.

A rate hike could spur further gains in the already-strong U.S. dollar, which would further reduce export demand for U.S. commodities, particularly wheat.

— Mark Weinraub is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Naveen Thukral in Singapore.