GRAINS-Wheat slips, set to post weekly drop on stronger dollar and supply glut
CANBERRA, Sept 22 (Reuters) – Chicago wheat futures fell on Friday and were set to end the week down 5%, pressured by a strengthening U.S. dollar and plentiful short-term supply from the Black Sea region.
Soybean futures also headed for a weekly fall and sat near 6-1/2-week lows as newly harvested U.S. crops added supply to a market awash with beans from Brazil.
Corn was roughly unchanged on Friday and over the week.
FUNDAMENTALS
* Most-active Chicago Board of Trade (CBOT) wheat futures Wv1 were down 0.3% at $5.74-1/4 a bushel by 0126 GMT and near a 33-month low of $5.70 reached on Sept. 12.
* CBOT soybeans Sv1 were flat at $12.94-1/4 a bushel and were down 3.4% over the week. Corn Cv1 slipped 0.1% to $4.75 a bushel and was set for a weekly decline of 0.3%.
* The U.S. dollar hit a six-month high against a basket of major currencies on Thursday after the U.S. Federal Reserve warned interest rates would remain higher for longer. FRX/
* A strong dollar makes U.S. grain less competitive at a time when cheap wheat from Russia has dominated the market, pushing down prices.
* Underscoring the plentiful short-term supply picture, the International Grains Council (IGC) raised its estimates for Russia’s wheat crop to 87.4 million tons from 84.4 million and for Ukraine’s wheat crop to 25.9 million from 24.5 million.
* However, the IGC downgraded its estimates for Australia, Canada and Argentina. These countries harvest later in the year than Russia, Europe and the United States, raising the threat of tighter supply in the coming months.
* Overall, the IGC trimmed its 2023/24 world wheat crop outlook by 1 million metric tons to 783 million.
* However, dry and hot weather has forced analysts to downgrade their wheat production forecasts for Australia significantly below that of the IGC.
* In the Black Sea region, Ukraine agreed to license its grain exports to Slovakia and pushed for a deal with Poland to end import restrictions by its neighbours.
* A senior U.S. official meanwhile said Russia’s leverage over Ukraine’s export of grain via the Black Sea was likely to weaken.
* Elsewhere, Egypt is in talks with an Abu Dhabi-based bank for a loan facility to finance wheat purchases from Kazakhstan, giving it a cheap alternative to grain from Russia, traders said.
* The U.S. Department of Agriculture reported U.S. wheat export sales in the week to Sept. 14 at 321,700 metric tons, in line with trade expectations. EXP/WHE
* For soybeans, however, the USDA reported weekly U.S. export sales at 434,100 metric tons, below a range of trade expectations. U.S. corn sales of 566,900 tons also fell near the low end of expectations.
* Export demand for U.S. corn and soybeans has lagged amid plentiful supplies of both crops from Brazil, the strong dollar and low water on the Mississippi River that has slowed the movement of barges to Gulf export terminals.
* The International Grains Council raised its forecast for 2023/24 global corn production by 1 million metric tons to 1.222 billion tons amid an improved outlook for Ukraine’s crop.
* Commodity funds were net sellers of Chicago soybeans, corn, wheat, soymeal and soyoil futures on Thursday, traders said.
MARKETS NEWS
World stocks fell for a fifth straight session and Treasury yields rose to levels last seen during the 2008 global financial crisis after the Federal Reserve warned rates will stay higher for longer. MKTS/GLOB
(Reporting by Peter Hobson; Editing by Rashmi Aich)
((peter.hobson@thomsonreuters.com;))
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