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U.S. grains: Wheat extends rally, soybeans slip

Weather concerns in Russia, Australia boost wheat

(Stephen Ausmus photo courtesy ARS/USDA)

Reuters — Chicago wheat rose more than one per cent on Thursday, extending a rally triggered by Wednesday’s U.S. Department of Agriculture data that put the 2015 U.S. crop below market estimates.

Corn futures rose slightly on technical buying and spillover support from wheat.

Soybeans slumped on pressure from an advancing Midwest harvest and technical selling.

Chicago Board of Trade December wheat added 5-1/2 cents or 1.2 per cent to $5.18-1/4 a bushel, after climbing 1.8 per cent on Wednesday (all figures US$). Short-covering also lifted prices, even as U.S. export sales fell below market forecasts.

Weather concerns linger for wheat crops in Russia and Australia, said Bill Biedermann, trader at Allendale Inc.

But for all three crops, if U.S. yields continue to impress, “farmers are going to sell (at) these prices and the market will have ample pipeline supplies,” Biedermann added.

The USDA report trimmed U.S. production more than expected, while also putting quarterly stocks below the average trade estimate.

“Heavy U.S. inventories have weighed on prices. The report is a sign that the problem is being alleviated,” Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia, said in a research note.

But traders said the global wheat market remains defined by large supply and stiff export competition.

The European Commission on Wednesday raised its monthly estimate of this year’s soft wheat harvest in the European Union.

Russia, meanwhile, signed a decree to reduce a wheat export tax as of Thursday, raising the prospect of increased shipments.

CBOT December corn added one cent, to $3.88-3/4 a bushel.

Corn export sales for 2015-16 totaled 748,200 tonnes in the latest week, in line with market forecasts.

November soybeans shed 14-3/4 cents, or 1.6 per cent, to $8.77-1/4, moving off a one-month high struck in the last session.

“The (U.S. soybean) yields coming out right now are just unbelievable,” said Karl Setzer, analyst at MaxYield Cooperative. “That more than anything is weighing on trade today.”

USDA said weekly soybean export sales for 2015-16 totaled 2.506 million tonnes, topping market forecasts for 1.3 million to 1.7 million.

USDA on Wednesday pegged U.S. stocks of corn and soybeans as of Sept. 1 below the average of analyst estimates, but supply was still ample heading into what was expected to be a bumper harvest.

Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Additional reporting for Reuters by Mark Weinraub in Chicago, Naveen Thukral in Singapore and Gus Trompiz in Paris.

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