GRAINS-Ample supply pushes Chicago wheat lower after short-covering rally
CANBERRA, Feb 21 (Reuters) – Chicago wheat on Wednesday shed some gains from the previous session as plentiful supply and falling Russian export prices weighed on market sentiment, pushing U.S. futures towards multi-year lows.
Soybean futures also dipped and corn edged higher, with both contracts close to their lowest levels since December 2020.
Ample supply of Russian wheat, Brazilian soybeans and U.S. corn have pressured prices, and the U.S. government last week forecast a sharp increase in U.S. end-of-season stocks of all three crops.
The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was down 0.2% at $5.78 a bushel by 0317 GMT, having surged 3.3% on Tuesday.
Traders attributed Tuesday’s rally to a bout of short-covering triggered by a weakening dollar USD=, which makes U.S. farm products more affordable for importers, and anticipation that Washington may impose .
Commodity funds have built large net short positions in wheat, soybeans and corn, leaving them prone to short-covering rallies.
“The general trend has been downwards,” said Andrew Whitelaw at consultants Episode 3 in Canberra.
“The world is moving slowly back to a period of higher inventories, with Russia expected to produce a larger wheat crop this year,” Whitelaw added.
CBOT soybeans Sv1 were down 0.1% at $11.78 a bushel and near last week’s low of $11.60-1/4, and while corn Cv1 rose 0.1% to $4.19 a bushel, it was just above Tuesday’s low of $4.14-3/4.
Hot and dry conditions during the growing season hit soybean yields but Brazil’s harvest will still be large by historical standards and other South American producers, such as Argentina, expect bumper crops.
By last Thursday, 32% of Brazil’s planted soybean area had been harvested, according to consultants AgRural, up 9% from a week earlier and ahead of last year’s pace.
The U.S. Department of Agriculture confirmed private sales of 155,000 metric tons of new-crop U.S. corn to Japan and 228,000 tons of old-crop U.S. soymeal to the Philippines.
Source Link: https://www.nasdaq.com/articles/grains-ample-supply-pushes-chicago-wheat-lower-after-short-covering-rally
