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Wheat poised for fourth quarterly loss as ample supply weighs

Chicago wheat rose on Friday, underpinned by dryness threatening production in some key exporting countries, although the market is poised for a fourth straight quarterly loss amid ample Russian supplies.

Corn and soybeans are down for a third consecutive quarter, as harvest of both crops in the United States and plentiful supplies from South America weighed on prices.

“The wheat market is facing pressure as Russia is keeping the global market well-supplied,” said one Singapore-based trader. “We don’t see a downside in prices from the current levels. In fact, prices are likely to rise as dry weather in Australia, Canada and Argentina is reducing output.”

The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 0.4% at $5.80-3/4 a bushel, as of 0209 GMT, corn was unmoved at $4.88-1/2 a bushel and soybeans added 0.2% to $13.03 a bushel.

CBOT wheat has lost around 37% of its value in four quarters of losses, while corn is down 28% and soybeans have dropped nearly 15% in three quarters.

The wheat market has faced pressure from near-record exports from Russia, the world’s biggest supplier. However, concerns over production in some key supplier such as Argentina and Canada have provided a floor under the market.

Argentine wheat yields during the 2023/24 season in western farmland could continue to fall if much-needed rains do not arrive quickly, the Buenos Aires grains exchange warned in a report on Thursday.

The European Commission on Thursday cut its estimates of this year’s wheat and maize harvests.

Soft wheat production in the EU was estimated at 125.3 million metric tons, down from 126.1 million tons forecast a month ago. The Commission also lowered its forecast for maize output to 59.8 million tons from 61.7 million tons projected a month ago.

Chicago corn and soybeans have been weighed down by bumper South American output earlier this year and the beginning of the U.S. harvest, which is providing freshly cut crops to the market.

Supply concerns from the Black Sea region have eased with resumption of Ukraine’s exports through a shipping channel. Ukraine’s move to create a shipping channel for grain exports is a positive step for global food security, although efforts continue to reach a new agreement over a broader Black Sea corridor, the top U.N. trade official said.

Chinese importers are believed to have made large purchases of animal feed corn from Ukraine in the past two weeks, traders in Asia and Europe said on Thursday, providing a boost for the war-ravaged country from an unlikely source.

A large domestic corn crop and surging imports from Brazil and Ukraine are set to flood the Chinese market in coming weeks, reducing demand for other grains.

Commodity funds were net buyers of CBOT corn and soymeal futures contracts on Thursday, traders said, and net sellers of soyoil, soybean and wheat futures.
Source: Reuters (Reporting by Naveen Thukral; Editing by Rashmi Aich and Sherry Jacob-Phillips)

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