Wheat consolidates after post-data losses, soybeans ease

April 11th, 2014

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Category: Grains, Miscellaneous

(Reuters) – U.S. wheat steadied on Thursday after bearish U.S. Department of Agriculture stocks data sent prices lower the previous session.

The USDA raised its forecast for global wheat ending stocks above market expectations.

Soybeans edged lower, unable to hold gains made after climbing above $15 a bushel in the last session on estimates of a lower U.S. 2013-14 carry over stock, while corn also eased.

“In our view, the USDA’s latest forecasts are bearish for wheat markets, neutral corn and bullish oilseed markets,” Luke Mathews, commodities strategist at Commonwealth Bank of Australia said.

Chicago Board of Trade May wheat futures were unchanged $6.69 a bushel by 1115 GMT, consolidating after a near 2 percent decline the previous session.

May corn lost 0.5 percent to trade at $5.00 a bushel.

The premium on wheat prices over corn W-C1=R hit a 3-1/2 month peak in March on weather concerns and the Ukraine crisis, driving more feed compounders to change their mix, although it has since eased slightly.

“There seems to be a pretty clear substitution effect in the market between corn and wheat,” said Tom Pugh, a commodities economist at Capital Economics.

“Wheat prices have gone up around 20 percent over the quarter on fears of disruptions from Ukraine and possible damage from the cold weather. This has caused a big decrease in the use of wheat and a big increase in the use of corn, especially as feed.”

The USDA raised its forecast for higher 2013/14 global wheat ending stocks to 186.68 million tonnes, above trade estimates. The figure was an upward revision from USDA’s March forecast of 183.81 million tonnes.

May soybeans lost 0.5 percent to $14.87-3/4 a bushel.

The USDA cut its forecast for the 2013-14 soybean carry over to 135 million bushels, down 10 million from last month. The figure was below an average of trade estimates of 139 million bushels and would be a 10-year low, if realised by the end of the marketing year on Aug. 31.

Pugh said that the shuttering of China’s soybean stockpiling programme next month was expected to cut global demand as well.

“They may even want to sell some of their stocks, which would put further downward pressure on global prices,” he said.

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