February 28, 2012

 

US wheat futures drop to 14-month low

 

 

US spring wheat futures fell to the lowest level in almost 14 months on speculations for a bumper yield this 2012.

 

On the other hand, the price for December new-crop corn slumped to a one-month low on prospects for a record harvest.

 

MGEX spring wheat dropped more than 1% on trade expectations for a rebound in spring wheat production following heavy flooding in the northern US Plains that curtailed plantings last year.

 

Rain and snow around the US Midwest and northern Plains during the past day provided a much-needed boost to soil moisture in key growing areas and further buoyed expectations of big crops.

 

"The numbers are bearish on corn, bearish on wheat," said Don Roose, analyst for US Commodities. "We are also seeing an increase in moisture systems around the Midwest."

 

Soy futures bucked the overall bearish trend in agricultural commodities due to strong export demand for US supplies, particularly from top world buyer China.

 

At 11:30 a.m. CST (1730 GMT), CBOT March soft red winter wheat futures were down US$0.04-1/2 at US$6.37-1/4 a bushel. The contract slipped below key technical support levels at the 30-day and 100-day moving average during the overnight session but found support near its 50-day moving average.

 

MGEX March spring wheat dropped US$0.13-1/4 to US$7.87-3/4 a bushel. The front-month MGEX contract fell to US$7.87-1/4, its lowest level since December 1, 2010, earlier in the trading session.

 

CBOT March corn was down US$0.01-3/4 at US$6.37-3/4 a bushel. The new-crop December contract fell US$0.06-1/4 to US$5.52-1/2 a bushel to hit a one-month low.

 

USDA projected US corn production at 14.270 billion bushels this year based on an expected yield of 164 bushels per acre, up from its previous forecast of 14.235 billion bushels. In 2011, US farmers harvested 12.358 billion bushels of corn on a yield of 147.2 bushels per acre.

 

The July-December corn spread hit its widest level in five months on Friday (Feb 23) as traders piled on their bearish bets for the new crop contract following the government's harvest forecast.

 

"Acreage numbers followed expectations yesterday and yield numbers predictably came in on the optimistic side today," Matt Zeller, analyst with INTL FCStone said in a research note to clients.

 

USDA's forecasted wheat crop of 2.165 billion bushels was up 45 million bushels from its earlier view and would represent an 8.3% jump from a year earlier.

 

USDA said on Friday morning that export sales of US soy in the latest reporting week were 4,032,400 tonnes, above a range of trade estimates for 3,500,000 to 3,900,000 tonnes. USDA said China bought 521,100 tonnes for 2011/12 and 2,805,000 for 2012/13.

 

CBOT March soy were up US$0.04-1/2 at US$12.81-1/4 a bushel. Prices peaked at US$12.84-3/4, their highest level since September 23.

 

The USDA this week confirmed further sales to China, totalling 425,000 tonnes, on Tuesday and Wednesday. These sales will show up in next week's USDA export sales report.