GRAINS-Wheat heads for 2nd weekly drop, corn near 11-week low on supply pressure
Wheat futures rose over 1 percent on Friday after three consecutive sessions of deep losses, but they were poised for a second weekly drop on pressure from outlook for higher Russian crop.
Corn ticked higher although expectations of record U.S. yields kept the market close to last session’s weakest since late June, while soybeans faced a weekly loss.
The Chicago Board of Trade most-active wheat contract rose as much as 1.2 percent after hitting its lowest since mid-July at $4.95-1/4 a bushel in the previous session. It has lost 1.8 percent this week, adding to last week’s 6.3 percent fall.
Corn, which marked the lowest since June 26 at $3.48-3/4 a bushel on Thursday, has shed over 4 percent this week. Soybeans were down nearly 1 percent for the week, their third weekly loss in four weeks.
The U.S. Department of Agriculture, in its monthly supply and demand report, increased its forecast for the Russian wheat harvest to 71 million tonnes from 68 million tonnes. Many traders have expected lower output due to a European drought that has stoked fears of export curbs.
Asian flour millers are expected to seek rare wheat shipments from Argentina in coming months as a second year of drought in traditional supplier Australia curbs supplies.
Funds selling added pressure on wheat futures.
“We think this extra decline might be symptomatic of investors selling to ride Chicago’s decidedly negative momentum,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia, referring to the decline in CBOT wheat futures.
“Chicago tends to bear the brunt of this activity as the preferred vehicle for investors’ wheat trading.”
Commodity funds were net sellers of CBOT corn, wheat, soybean, soymeal and soyoil futures contracts on Thursday, traders said.
The USDA predicted U.S. corn output at 14.827 billion bushels, the most in two years and above analysts’ estimates for 14.351 billion to 14.607 billion bushels.
It estimated U.S. soybean output at a record 4.693 billion bushels, but still within the range of analysts’ estimates for 4.523 billion to 4.781 billion bushels.
Meanwhile, consultancy Strategie Grains cut its outlook for grain maize production in the European Union by nearly 5 percent as crop conditions continued to deteriorate over the summer due to hot and dry weather in France and central Europe.
Source: Reuters (Reporting by Naveen Thukral; Editing by Subhranshu Sahu)