U.S. grains: Wheat futures plunge on sluggish exports

MGEX March 2019 wheat with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — Chicago Board of Trade grain and soybean futures all soured on Tuesday as U.S. wheat sellers failed to nab any export sales and traders waited impatiently for news on the latest of talks on the U.S.-China trade war.

Wheat was the story of the day: Most CBOT wheat futures contracts — including most actively traded May — fell to new contract lows, while Kansas City wheat futures contracts all fell to new lows across the board.

Grain traders said they were monitoring bearish technical signals as well as falling prices in the global cash wheat market.

“If you’re looking for reasons to slam wheat down right now, it’s not hard to find them,” said Jack Scoville, a futures market analyst at the Price Futures Group.

Case in point: the recent wheat tenders. Instead of opting for U.S. wheat, Syria’s General Establishment for Cereal Processing and Trade (Hoboob) bought 200,000 tonnes of Black Sea-origin wheat in its latest international purchasing tender, a government source said.

Meanwhile, trading house Agrocorp secured a tender to supply 50,000 tonnes of wheat to Bangladesh, and is expected to draw grain from Russia to fulfil the deal, according to officials with the state grains buyer.

Chicago Board of Trade’s March soft red winter wheat settled down 14-1/2 cents from Friday, closing at $4.89-3/4 per bushel (all figures US$). Earlier in the day, the contract’s price fell to a low of $4.88-1/2 per bushel, the lowest since Jan. 17, 2018.

Markets were closed on Monday for Presidents Day, a U.S. holiday.

K.C. March hard red winter wheat ended down 15-3/4 cents at $4.60-3/4 a bushel, while MGEX March spring wheat fell 17-1/2 cents to $5.55-1/2 a bushel.

CBOT soybean futures also plunged to a four-week low, as traders liquidated their positions and began questioning if the grains market is finally undergoing a reality check given the glut of U.S. supplies and ongoing trade uncertainty.

CBOT March soybeans settled the day down 6-3/4 cents from Friday, at $9.00-3/4 per bushel. Earlier in the day, the March contract fell to $8.94-3/4 a bushel, the lowest price since Jan. 17.

U.S. corn futures, too, dropped to multi-month lows on Tuesday.

CBOT March corn closed down five cents at $3.69-3/4 per bushel. Earlier in the day, the most actively trade corn futures contract fell to $3.69 per bushel, the lowest price since Nov. 28, 2018.

Traders said grain and oilseed futures were being pressured on Tuesday by mounting concerns about how much soybean acreage U.S. farmers will plant this spring, as South American weather improves and export competition from Brazil and Argentina shows little signs of waning.

The U.S. Department of Agriculture is expected to release its forecasts for U.S. 2019 corn, soybean and wheat plantings this week at its annual Outlook Forum.

China also said that it will continue to diversify its agricultural imports channels, and increase domestic soybean planting acreage, according to a government policy statement published on Tuesday.

The report comes as a new round of talks is underway between the U.S. and China to resolve their trade dispute, with follow-up sessions at a higher level later in the week.

The talks follow a round of negotiations that ended last week in Beijing without a deal but which officials said had generated progress on contentious issues.

— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.


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