(Agrimoney) – Chicago wheat futures fell nearly 3% on Wednesday, hitting their lowest level in over a month, on the prospect of a bumper harvest in the Canada and the northern plains.
On Tuesday a crop tour by the Wheat Quality Council found that spring wheat yield prospects in southern North Dakota, and neighbouring regions of South Dakota and Minnesota, were at the highest in at least 21 years, with an average yield of 51.1 bushels per acre forecast for crops surveyed.
And prospects for spring wheat over the border in Canada are also looking rosy.
“Canada weather continues to improve,” said broker US Commodities, adding that “yield production estimates are stabilizing and improving”.
September Minneapolis spring wheat closed down 2.0% to close at $5.29 ¾ cents a bushel, a contract low.
And September Kansas winter wheat finished down 2.0% at a contract low of 4.94 ¾ a bushel.
Global prices fall
Chicago wheat was also under pressure from falling prices in Europe.
Russia’s grain harvest is 21% complete at 34.5m tonnes, with a yield of 3.51 tonnes per hectare, up from 3.44m tonnes per hectare last year.
Darrell Holaday of Country Futures noted rumours that two cargoes of Black Sea wheat are being dispatched to Mexico.
If true, the shipments would underline how uncompetitive US wheat is, given high cost of freight between the Black Sea and Mexico.
But there was a touch of bullish news from Kazakhstan, where overly wet weather led the US Department of Agriculture’s bureau in Astana, to cut its forecast for the country’s wheat production to 12.8m tonnes, compared to official USDA forecasts of 13.5m tonnes.
But with rains easing drought concerns in France, December Paris wheat, the most widely traded contract, closed down 1.4% at E179.75 a tonne.
Fund selling is likely to have taken its toll on prices as well. The last week of the month is typically the time speculators close out positions, and with funds still net-long on the ag spectrum the effect is bearish.
September Chicago wheat closed down 2.9% at $4.96 ¼ a bushel.
‘Shot of rain’
The global weather outlook has turned positive for corn as well.
CHS Hedging report that globally, “weather remains mostly ideal” for corn.
“France is finally getting a shot of rain to ease their recent dryness that has done damage to the corn crop,” CHS said, and rain is headed for the drought stricken Chinese Corn Belt as well.
September corn finished down 2.1% at $3.67 ¾ a bushel.
Export sales
But soybeans bucked the downward grains trend, on the front end at least.
The market is poised for US export sales data, which are expected to be bullish, particularly for old crop beans.
Analysts are expecting old crop soybean sales of 100,000-200,000 tonnes, and new crop sales of 700,000-900,000 tonnes.
Last Thursday saw exports of 45,000 tonnes old crop beans, and 557,000 new crop beans.
Shanghai rallies
There was also some stronger macroeconomic news as the Shanghai stock exchange rose 3.5% on Wednesday, its biggest gain in one and a half weeks.
Chinese demand is particularly important for soybean prices, so a stronger Chinese economy, or at least a less precarious one, is a bullish signal.
But Mr Holaday downplayed the significance of rising export sales, noting that “the gap between this year and last year will remain very wide and the prospect for additional sales given the world competition is discouraging to the industry”.
August soybeans closed up 0.9% at $9.83 a bushel, while November new crop beans edged down 0.1% at $9.43 ¼ a bushel.
Currency lifts softs
The Brazilian real continued to drive coffee and sugar prices on Wednesday.
The Brazilian currency rose 0.8% to a three day high against the dollar today, supporting prices for sugar and arabica coffee, of which Brazil is the world’s largest exporter.
October raw sugar finished up 1.1%, at 11.29 cents a pound.
September arabica settled up 1.4%, at 121.90 cents a pound, while September robusta finished up 0.8%, at $1,639 a tonne.
Indian weather improves
Meanwhile cotton fell on improving weather prospects.
Jack Scoville of Price Futures said the US weather is improving for cotton “as warmer and drier weather is seen in all major US production areas”.
“World weather has improved as well, especially in India,” he added.
December New York cotton settled down 1.1% at 63.89 cents a bushel.
