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Tuesday, December 5, 2023

Wheat flat; set for biggest weekly drop in 1-1/2 months on supply pressure

SINGAPORE: Chicago wheat futures were largely unchanged on Friday, with the market on track for its biggest weekly decline since early August, as plentiful Russian supplies and a stronger dollar weighed on prices.

Corn and soybeans were poised for weekly losses with freshly harvested US crops adding to ample South American supplies.

“Russian prices are certainly leading the way in price trend. Nearby prices are also getting pressured by export expectations from Ukraine,” a Singapore-based grains trader said.

“For the near term, there is certainly no shortage of wheat supply.”

The most-active wheat contract on the Chicago Board of Trade (CBOT) was unmoved at $5.75-3/4 a bushel, as of 0245 GMT and down 4.7% this week, its biggest drop since early August.

Soybeans were up 0.3% at $12.98 a bushel and were down 3.1% over the week. Corn was flat at $4.75-1/4 a bushel and was set for a weekly decline of 0.2%.

The US dollar hit a six-month high against a basket of major currencies on Thursday after the US Federal Reserve warned interest rates would remain higher for longer.

A strong dollar makes US 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.

EU wheat falls off 3-week peak in wake of Chicago

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.

The US Department of Agriculture reported US wheat export sales in the week to Sept. 14 at 321,700 metric tons, in line with trade expectations.

For soybeans, however, the USDA reported weekly US export sales at 434,100 metric tons, below a range of trade expectations.

US corn sales of 566,900 tons also fell near the low end of expectations.

Export demand for US corn and soybeans has lagged amid plentiful supplies of both crops from Brazil.

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.

Wheat flat; set for biggest weekly drop in 1-1/2 months on supply pressure

Source: Brecorder

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