(Nasdaq) – Bountiful grain harvests pushed wheat prices to a six-year low Wednesday, while forecasts for good Midwest rains also dragged corn and soybean prices lower.
Wheat prices sank to the lowest level in six years as farmers in the U.S. southern Plains made steady harvest progress, gathering a plentiful crop at a time when the world already is oversupplied with the grain, and demand for U.S. wheat is slow. Federal forecasters earlier in June said benevolent growing conditions during the spring had graced the Great Plains, leading to a projection for record winter-wheat yields. Farmers have since been reporting stellar yields.
Newly harvested wheat crops are adding to inventories as domestic stockpiles already are projected to hit a 29-year high, and global wheat reserves are also at records. Meanwhile, a strong U.S. dollar has for months weighed on export demand, making domestic grain rations less competitive on international markets.
Wheat futures for delivery in July slid 15 1/4 cents, or 3.4%, to $4.29 1/2 a bushel at the Chicago Board of Trade, the lowest closing price since June 2010.
Corn and soybean prices also slid, pressured by forecasts for rainfall in coming days that could reach some of the driest parts of the Midwest, relieving dry soils just in time for corn’s key pollination phase. Near-term weather forecasts call for showers in the southern half of the Corn Belt, which could alleviate crop stress in places such as Kansas, Missouri and southern Illinois.
Wheat’s move lower helped push corn prices to a nearly two-month low, as wheat is a substitute for corn in animal feed. Cheaper wheat means some livestock producers likely will swap wheat for corn in feed rations.
“The corn [market] is breaking down, and today’s weather forecast seemed to put the nail in the coffin for the bulls,” said Charlie Sernatinger, head of grains trading at ED&F Man Capital Markets, in an afternoon note to clients.
CBOT July corn declined 12 1/2 cents, or 3.2%, to $3.72 3/4 a bushel, the lowest settlement price since May 9.
Benign weather forecasts also buffeted prices for soybeans. However, ongoing concerns that heat and dryness will blanket the Farm Belt in August, the most critical month for soybean development, stemmed losses in the oilseed market.
CBOT July soybeans shed 6 cents, or 0.5%, to $11.44 1/2 a bushel.
