Chicago | Reuters — U.S. wheat futures surged on Monday due to the U.S. Agriculture Department’s bigger-than-expected cut to the domestic supply picture while corn and soybean futures sagged.
Surging export demand for U.S. supplies, which ramped up after wheat prices fell to a 3-1/2-year low late last month, keyed the government’s cut to ending stocks.
“The thing that sticks out is that the balance table on the wheat market is probably the tightest now,” said Don Roose, analyst with U.S. Commodities in West Des Moines, Iowa. “With the world competition that we have, the government is being pretty aggressive with our export pace.”
USDA lowered its U.S. end stocks figure to 558 million bushels, 50 million below its January estimate and lower than trade expectations for 603 million bushels. The cut was entirely due to a 50 million-bushel boost to its export forecast.
The benchmark Chicago Board of Trade March soft red winter wheat contract settled up 7-1/4 cents at $5.84-3/4 a bushel, or up 1.3 per cent (all figures US$). KC hard red winter wheat futures and MGEX spring wheat, which track high-protein supplies prized on the export market, both jumped more than two per cent.
CBOT wheat topped on Monday out at its highest level since Jan. 9 while KC hard red winter wheat reached its highest price since Dec. 17 during the session.
USDA also reduced its corn stocks figure due to robust export demand but traders said that a weak cash market and technical selling overwhelmed the revisions to the balance sheet.
The monthly supply and demand report pegged corn ending stocks at 1.481 billion bushels, down from its January estimate of 1.631 million. The corn stocks figure was less than the average market forecast of 1.619 million and fell below the lowest trade guess of 1.574 million.
“This is about the most bullish number anybody would have projected and the market is unable to rally on it, which is generally a negative sign,” said Joe Vaclavik, president of Standard Grain in Chicago.
CBOT corn for March delivery dropped 1-1/4 cents to $4.43 a bushel. Prices strengthened early in the day but failed to hold support above the high end of their 20-day Bollinger range.
CBOT March soybeans closed six cents lower at $13.25-1/2 a bushel, snapping a seven-session streak of positive closes.
USDA left its outlook for soybean ending stocks unchanged at 150 million bushels, slightly above the average trade estimate of 143 million bushels.
“For the beans, even though they did increase export demand as expected, they really left the domestic side alone — reduced imports and cut residual,” said Jack Scoville, analyst at the Price Futures Group in Chicago. “It took some bloom off the rose.”
— Mark Weinraub is a Reuters correspondent covering grains futures from Chicago. Additional reporting for Reuters by Michael Hirtzer and Karl Plume in Chicago.