US MIDDAY: wheat drops two percent

Chicago Board of Trade wheat futures fell nearly 2 percent on Friday, dropping below $5 a bushel amid plentiful global supplies that have curbed demand for US grain, analysts said. Corn firmed after hitting a one-month low ahead of a busy US harvest weekend. Soyabean futures fell on profit-taking following a rally to two-month highs this week but were hovering near support at $9 a bushel.

At the CBOT as of 12:54 pm CDT (1754 GMT), December wheat was down 10 cents at $4.92-1/2 per bushel after falling to $4.89-3/4, its lowest since September 22. Technical selling picked up as the contract dropped below the $5 mark. “We have just got a problem of too much wheat,” said Alan Brugler, president of Brugler Marketing & Management. “Wheat gets these rallies due to short covering, but once they cover positions, nobody wants to buy it.”

The US Department of Agriculture has projected that global wheat stockpiles will grow to 228.5 million tonnes by the end of the 2015/16 marketing year, an all-time high. CBOT December corn was up 1/4 cent at $3.75-3/4 a bushel, rebounding after falling to $3.72-1/2, a one-month low. November soyabeans were down 3-1/4 cents at $9.02. Grain and oilseed futures were also pressured this week by investors retreating from commodities.

“It’s this malaise toward the commodity sector as a whole that we’ve seen, led by crude oil,” said Arlan Suderman, analyst with Water Street Solutions. “Crude oil looked like it was going to break out earlier in the week, and then hit resistance. Ever since then, we have seen weakness in the broader commodity indices, and that has left a negative tone for grain and oilseeds as well,” Suderman said.

Soyabeans drew underlying support from signs of improving export demand. The USDA on Friday reported US soyabean export sales for the week ended October 8 at nearly 1.5 million tonnes, near the high end of trade expectations. “I was pretty encouraged by the exports. I think we are going to (continue to) see 1.5 million tonnes a week for a while now,” Brugler said, noting increased demand from top global soya buyer China. Weather forecasts called for mostly dry conditions in the US Corn Belt through early next week, allowing the harvest of soyabeans and corn to progress. The USDA reported soyabean harvest progress at 62 percent and corn progress at 42 percent as of October 11.


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