Wheat slides to 2-wk low on forecasts of ample supplies
Category: Grains
(Reuters) – Chicago wheat slid to its lowest in two weeks on Monday, weighed down by U.S. Department of Agriculture forecasts of plentiful global supplies.
Soybeans edged down after climbing earlier in the session to their highest since May 1, supported by a reduction in the USDA estimate of old-crop U.S. ending stocks, while corn fell for a second day on improving Midwest weather.
In its first estimates of the 2014 harvest, the USDA pegged U.S. winter wheat production at 1.403 billion bushels and the hard red winter wheat crop at 746 million bushels, roughly in line with trade expectations.
Global wheat production for 2014/15 is forecast at 697 million tonnes, down from a record 714 million tonnes in 2013/14, the USDA said. But global wheat stocks for 2014/15 are seen rising by almost 1 million tonnes to 187.4 million tonnes.
“We are seeing big losses in the wheat market in response to the USDA report,” said Luke Mathews, commodities strategist at Commonwealth Bank of Australia.
“The key thing is the USDA is forecasting comfortable stocks for 2014/15 season and if that comes true it implies downward pressure on prices.”
The market is also keeping a watch on political situation in Ukraine, one of the world’s top grain suppliers.
Pro-Moscow rebels declared a resounding victory in a referendum on self-rule for eastern Ukraine, with some saying that meant independence and others eventual union with Russia as fighting flared in a conflict increasingly out of control.
A disruption in supplies from Ukraine could drive prices higher.
Chicago Board of Trade benchmark July wheat had dropped 2.1 percent to $7.07-1/2 a bushel by 0259 GMT, after touching $7.00 a bushel – its lowest since April 28.
Corn for July delivery gave up 0.6 percent to $5.04-1/2 a bushel, and July soybeans lost 0.2 percent to $14.84-3/4 a bushel. Soybeans rose to $14.96 a bushel earlier on Monday – their highest since May 1.
Soybeans gained after the USDA lowered its forecast of 2013/14 U.S. soy ending stocks to 130 million bushels, below an average of analyst estimates for 134 million.
Improving weather for planting in the U.S. Midwest is pressuring corn prices. Some traders expect the USDA to report planting progress at around 60 percent in its next weekly progress report on Monday, up from 29 percent as of May 4.
