U.S. grains: Wheat, soy slump on technicals, commodities selloff

Record-large production rates of U.S. corn-based ethanol seen

wheat
(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. grain and soy prices fell on Wednesday, pressured by technical selling amid a broad downturn across many commodities as the dollar climbed.

Chicago Board of Trade soybean futures eased from an earlier roughly four-month high while wheat futures declined for the third straight session, nearing their contract lows set in late November.

Corn futures touched a one-week low.

The 19-market Thomson Reuters CoreCommodity Index was down 1.5 per cent. The dollar hit a two-week high against a basket of currencies, making U.S. goods more expensive in global markets.

Statistics Canada data released earlier showing bigger-than-expected Canadian canola and spring wheat harvests weighed on prices for canola, spring wheat and soybeans. Worries about dry weather in Argentina had propelled soybeans higher earlier this week.

“It’s a lot technical and a little bit of an increase in supply around the world,” Price Futures Group analyst Jerry Gidel said of the soy declines.

CBOT January soybeans settled down 5-3/4 cents at $10.02-3/4 per bushel (all figures US$). The contract earlier reached $10.14-1/4 but failed to surpass Tuesday’s peak of $10.15, triggering selling.

“The (soy) price is profiting from the dry weather in Argentina … Only half of the expected acreage has been planted, which is significantly less than at this time last year. The lack of moisture is also fueling fears of reduced yields,” Commerzbank said in a market note.

Dealers said the declaration of a La Niña weather event, which can bring dry weather to parts of South America, helped to heighten concern about the crop outlook.

“The market is trying to build a weather premium but we feel it is a bit too early to get worried about Argentina’s soybean crop,” said an India-based commodity analyst.

CBOT March wheat futures fell 7-1/2 cents to $4.25-1/4 per bushel, nearing their life-of-contract low from late in November of $4.24-1/4. The December wheat contract set a lifetime low of $3.98-1/2 ahead of its expiry next week.

CBOT March corn futures were down one cent to $3.52-3/4 per bushel.

Production of corn-based ethanol hit record rates of 1.108 million barrels per day, according to the U.S. Energy Information Administration, underlining robust demand for corn.

— Michael Hirtzer reports on commodity markets for Reuters from Chicago; additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore.

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