Chicago wheat prices fell to a seven-month low on Tuesday after much-needed precipitation provided some moisture to the drought-stricken winter-wheat growing area of the United States. Corn also slipped, extending its losing streak to the longest since mid-2007, on a potential rebound in world grain supply this year, while soyabeans dipped.
Snow and rain showers were moving across the US Southwest Plains, which will help but not eliminate the harmful impact on wheat production from the worst drought in more than 50 years, US agricultural meteorologist Don Keeney of MDA EarthSat Weather said. "The market's breaking lower with an increasing chance of rain in some of these dry areas," said Don Roose, president of Iowa-based US Commodities.
Pressure from improving weather outweighed support from a cut to US wheat stocks in US Department of Agriculture data on Friday. Chicago Board of Trade March wheat dropped 9-1/2 cents, or 1.3 percent, to $7.32 a bushel. It dipped as low as $7.25-1/2, the lowest nearby price since June 29. Australia, the world's second-largest wheat exporter, also slightly raised its production forecast for the current marketing year from its December estimate, after the crop largely escaped damage from a heat wave and floods this summer.
The needed moisture for US wheat crops came as the expectations of large corn and soyabean harvests in South America were already weighing on grain markets.
"The most obvious reason behind (the fall in prices of) wheat is some improvement in weather conditions in the US where many people were expecting a good deal of damage to the red winter crop due to the dry winter," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
March corn fell 6 cents, or 0.9 percent, to $6.96-1/4 a bushel. It earlier fell to $6.91-1/2 a bushel, its lowest level since January 11. Corn registered its eighth straight loss, extending its longest losing streak in 5-1/2 years. March soyabeans lost 10-3/4 cents, or 0.8 percent, to $14.20-3/4 a bushel, giving up earlier gains and touching the lowest nearby price since January 24. "This market is fully realizing that yes, the supply problem will be taken care of with the fall harvest," said Rich Nelson, chief strategist at Allendale Inc, but cautioned that 2012 also shaped up as a record year before drought devastated crops.
Comments
Comments are closed.