(Agriculture.com) – Wheat futures dropped to a three-and-a-half-year low, and corn fell for a second straight day on expectations that domestic demand for the grains will decline amid rising global production. Soybeans gained after China bought more of the oilseeds from the U.S. and domestic processing rose.
About 250 million bushels of wheat are forecast by the U.S. Department of Agriculture to be used in animal feed, the government said in Friday’s supply and demand report. That is down from a December estimate of 310 million bushels and year-ago usage of 388 million bushels, according to the agency. Overseas sales have been robust this year, but with Canada expecting a record harvest and Australia set to collect its third-largest crop ever, purchases of U.S. wheat may slow, said Darrell Holaday, the president of Advanced Market Concepts in Wamego, Kan.
Egypt on Saturday bought 55,000 metric tons from U.S. inventories, according to the General Authority for Supply Commodities. That was the first purchase of U.S. grain by the North African country since the marketing year started June 1. Since then, demand news has been quiet.
“We had a one-day rally this week after Egypt bought wheat from us, but since that time, there have been no hints of demand from anybody,” said Brian Hoops, president at Midwest Market Solutions in Springfield, Mo. “With corn prices moving lower, there’s little incentive to buy wheat.”
Wheat futures for March delivery dropped 11 1/2 cents, or 2%, to $5.67 3/4 a bushel in Chicago trading, the lowest closing price for the front-month contract since July 14, 2010.
Corn prices declined as production of ethanol in the U.S. fell 5.6% from the prior week to 868,000 barrels a day, the lowest level since the week ended Oct. 4, according to the Energy Information Administration.
Livestock producers probably will use less corn to feed animals as the U.S. cattle herd is at a 60-year low and thousands of piglets die from a swine virus, analysts said. The Department of Agriculture last week unexpectedly increased the amount of corn it sees being used in livestock rations, a move that is unlikely to come to fruition, according to market watchers.
The U.S. corn harvest last fall was pegged by the government in a Friday report at 13.925 billion bushels. While that is lower than the 13.989 billion forecast in December, it is still a record, USDA data show.
Chicago Board of Trade corn futures for March delivery fell 5 3/4 cents, or 1.3%, to $4.25 3/4 a bushel.
