U.S. Wheat Slides on Export Uncertainty, Corn’s Fall

August 6th, 2013

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Category: Grains, Oilseeds

(Wall Street Journal) – U.S. wheat futures settled at a 13-month low Monday, pressured by uncertainty about export demand and declines in corn prices.

Chicago Board of Trade September wheat settled down 15 1/4 cents or 2.3% at $6.45 1/4 a bushel, the lowest close for the front-month contract since June 2012.

KCBT September wheat fell 11 1/4 cents or 1.6% to $6.95 1/2 a bushel. MGEX September wheat fell 7 1/2 cents or 1.0% to $7.33 3/4 a bushel.

While export demand for U.S. wheat has been strong in recent weeks, price competition is tough from other major wheat exporters, and traders are worried about slower global demand.

“We saw a slowdown in global export developments in the wheat,” with fewer signs of strong demand over the weekend, said Terry Reilly, senior commodity analyst with Futures International in Chicago.

Wheat also fell on expectations for possible rain to benefit wheat crops in Argentina, and on increasing expectations for wheat output in the Black Sea region, Mr. Reilly said.

Wheat also fell because some traders were selling futures to take profits on spread positions betting that wheat prices would outperform corn. While wheat futures have been relatively stable in recent weeks, corn futures have fallen sharply due to expectations for a large corn harvest.

That allowed some traders on Monday to take profits, exiting earlier positions, by selling wheat futures and buying corn. “That is what we’re seeing as the primary driver of wheat prices losing ground to corn,” Mr. Reilly said.

Corn and wheat prices are linked since the two grains are substitutes in animal feed.

Corn futures fell Monday on continued favorable weather forecasts for crop growth in the U.S. Cool temperatures, expected to continue for the next two weeks across the Corn Belt, are reducing stress on corn crops as they approach the end of their crucial pollination phase.

September corn futures fell 6 3/4 cents or 1.4% to $4.69 1/4 a bushel, a fresh two-and-a-half-year low.

Soybeans ended mixed. Nearby futures fell and deferred soybeans rose as traders took profits on earlier spread positions. Traders bought deferred futures to profit on bearish bets in those contracts after recent price declines.

August soybeans, thinly traded ahead of the contract’s expiration on Aug. 14, fell 1 1/4 cents or 0.1% to $13.29 3/4 a bushel, a nearly one-and-a-half-year closing low for the front-month contract.

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