Wheat declines

US wheat futures declined for a fourth straight session on Wednesday, setting a five-month low and adding to Tuesday's loss of more than 3 percent after the US government forecast hefty stockpiles. Corn fell to a 3-1/2 week low, while soyabeans closed mixed as firm cash markets supported the nearby contract. At the Chicago Board of Trade, most-active March wheat fell 9-1/2 cents to settle at $8.12 per bushel after dipping to$8.09, just above chart support at its 200-day moving average near $8.07.
Front-month December wheat ended at $7.94-3/4, the lowest spot price since July 11. CBOT March corn settled down 2-1/2 cents at $7.25-1/2 a bushel while January soyabeans closed up 1-1/2 cents at $14.73-1/2 a bushel. Grains continued to sag one day after the US Department of Agriculture raised its estimate of US 2012/2013 wheat ending stocks to 754 million bushels, 50 million bushels more than its November estimate, due to the slow pace of exports.
The USDA also raised its forecast for global wheat inventories to almost 177 million tonnes from 174 million in November and above market projections following estimates of larger crops from Australia, Canada and China. The bearish data on Tuesday knocked CBOT March wheat out of a trading range it had been in since July, triggering technical selling that continued on Wednesday. "Wheat is just trying to price itself as a feed grain. If you can't export it, it's going to price itself into feed," said Dan Cekander, analyst with Newedge USA in Chicago.
Wheat competes in the feed market with corn. The premium for spot CBOT wheat over corn fell to 73-3/4 cents per bushel at midday Wednesday, from $1.06 ahead of USDA's report. Grain markets had little reaction after the US Federal Reserve announced plans to ramp up its stimulus to the economy, although US stocks rose and the euro rallied against the dollar following the news. The central bank committed to monthly purchases of $45 billion in Treasuries on top of the $40 billion per month in mortgage-backed bonds it started buying in September.
In a surprise move, the Fed also adopted numerical thresholds for policy, a step that had not been expected until early next year. CBOT corn sagged in sympathy with the declines in wheat, as well as slow export demand, posting its fifth loss in as many sessions. South Korea's largest feed maker, NOFI, previously a loyal US corn buyer, bought South American and South African corn in a major tender in a new strategy to diversify supply sources.