Chicago | Reuters — U.S. wheat futures tumbled more than three per cent for their largest losses in two weeks on Wednesday after the U.S. Department of Agriculture boosted its production forecast for the winter wheat crop in a monthly supply and demand report.
Corn futures posted their largest daily declines since March at the Chicago Board of Trade, pressured by plentiful domestic and global grain supplies, while soybean futures were only narrowly lower.
Most-active CBOT July wheat retreated from a two-month high, notching an “outside day” on the charts that could signal a near-term high. The contract settled 18-3/4 cents lower at $5.13-1/2 per bushel, extending losses following release of the USDA report (all figures US$).
Euronext milling wheat futures also fell sharply even as scouts on a crop tour in France predicted dry weather could reduce yields in the European Union’s top producer.
USDA forecast winter wheat production at 1.505 billion bushels, up 33 million bushels from last month’s forecast.
However, rainfall that helped boost production in the southern U.S. Plains also caused isolated flooding and crop damage. The harvest is just getting under way and overall quality of the crop will not be determined for weeks, analysts say.
Prices for wheat jumped this week on prospects for more showers during the next 10 days, which could further damage wheat fields.
“The wheat numbers were high, and we are seeing some of the buying come out of the market. There is some damage (of U.S. wheat) out there, but they (USDA) wouldn’t have had a chance to get that into the report,” said Price Futures Group analyst Jack Scoville.
USDA lowered its soybean supply outlook for the 2015-16 crop year due to increased domestic usage and raised its view of corn supplies due to lower ethanol production.
On June 30, the government will issue its annual acreage report: how much corn, soybeans, spring wheat and other crops were seeded this spring. That release typically results in more volatile swings in futures prices than the more routine monthly supply reports.
CBOT July corn was down 7-3/4 cents at $3.57-1/4 per bushel and CBOT July soybeans off 2 cents at $9.49-1/2.
“Slightly bearish on corn, slightly bullish on soybeans,” Allendale Inc analyst Rich Nelson said of the USDA report. “In the big picture, these are still preliminary numbers and the trade looks at them like that for now.”
— Michael Hirtzer reports on grain markets for Reuters from Chicago. Additional reporting for Reuters by Karl Plume in Chicago, Mark Weinraub in Washington, Michael Hogan in Hamburg and Manolo Serapio Jr. in Singapore.