Wheat slips towards 3-year lows on supply glut
Chicago wheat futures drifted back towards three-year lows on Tuesday amid strong supply of cheap Russian grain and an upward revision to U.S. production forecasts, but anticipation of weaker harvests in Argentina and Australia limited losses.
Corn and soybean prices fell.
Buyers expect wheat prices to fall further and are therefore purchasing only what they need, reducing demand, said Ole Houe, director of advisory services at Australian agricultural brokerage IKON Commodities.
“Prices will be higher in 6 months but the bottom is not here yet,” he said.
Most-active Chicago Board of Trade (CBOT) wheat futures were down 0.3% at $5.63 a bushel by 0324 GMT.
Wheat on Friday plunged to $5.40, its lowest level since September 2020, after the U.S. government unexpectedly raised its estimate for U.S. production to 1.812 billion bushels from 1.734 billion bushels.
Prices recovered somewhat on Monday, but pressure from Russian supply remains, with the European Union’s crop monitoring service MARS raising its estimate for Russia’s 2023 harvest to 89.7 million metric tons from 86.7 million tons forecast in June.
Flush with grain, Russian exporters are offering 12.5%-protein wheat for free-on-board (FOB) delivery in late October-early November for $235 per ton, according to the IKAR agriculture consultancy.
Grain exports from Ukraine have fallen to 6.68 million tons so far in the 2023/24 July-June season from 8.99 million tons a year ago, government data showed.
But three more cargo ships left Ukrainian seaports on Sunday and five new vessels came in for loading, raising hopes that shipment via the Black Sea will become easier and cheaper.
Longer term, attention will move to Australia, Argentina and Canada, which harvest later in the year and where hot and dry weather has damaged crops.
In other crops, CBOT corn fell 0.6% to $4.85-3/4 a bushel and soybeans were 0.5% lower at $12.70-1/2 a bushel.
Both corn and soybean prices are near multi-year lows.
U.S. government data showed on Monday that harvests of both crops were 23% complete by Sunday, slightly behind analyst expectations.
Soybean condition ratings improved very slightly, easing concerns of tight supplies after the U.S. Department of Agriculture reported higher-than-expected stockpiles.
Brokers StoneX raised their estimate of U.S. 2023 corn production to 15.202 billion bushels from 15.102 billion a month ago and of U.S. soybean production to 4.175 billion bushels from 4.144 billion a month ago.
Brazil’s 2023/24 soybean planting reached 5.2% of the expected area last week, the quickest pace ever for the period, an agribusiness consultancy said.
Brazil and the U.S. are the world’s biggest exporters of soybeans and corn.
Commodity funds were net buyers of Chicago corn, wheat, soyoil and soybean futures on Monday and net sellers of soymeal, traders said.
Source: Reuters (Reporting by Peter Hobson; Editing by Rashmi Aich)
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