Wheat futures plunged to fresh ten-year lows, on heavy world supplies and the stronger dollar.
“We continue to see a large supply of wheat in the world,” Jason Roose, at US Commodities, told Agrimoney.
“The dollar is trading stronger which is weakening our trade,” Mr Roose noted.
The dollar turned higher on Friday, after Janet Yellen, chair of the Federal Reserve, suggested that there could be two hikes in interest rates before the end of the year.
The stronger dollar makes US wheat less competitive on a world export market that is already glutted, particularly due to heavy supplies from Russia.
Feed wheat glut
Despite heavy wheat supplies, wheat quality is unlikely to be stellar this year, with some concerns about protein levels in Russia, following the small harvest in Europe.
This could mean more feed wheat around, weighing on soft red wheat prices in Chicago.
Hard red winter wheat in Kansas City, which was trading at a discount to Chicago soft red wheat as early as the start of this week, is now at its biggest premium in 11 weeks.
But Mr Roose stressed that these recent lows have been a long time coming.
“The problem didn’t start today,” Mr Roose said, noting the long term drive to wheat self-sufficiency around the world.
“As we continue to see a burdensome supply, it is very hard for these markets to go up,” Mr Roose said.
Egypt, the world’s top wheat buyer, purchased 180,000 tonnes of Russian wheat in a tender.
Russian wheat offers were lower priced than in the previous tender, held on Tuesday, when Gasc, the Egyptian state grain buyer, cancelled the tender without explanations.
The wheat was purchased at an average price of $185.52 a tonne cost and freight.
Daewoo sold Russian wheat for $178.45 a tonne excluding freight, having offered at $179.61 a tonne on Tuesday.
Technical pressure developed as well, as the most-traded December contract burst out of its previous trading band, breaking sharply through the $4.20 a bushel level.
December Chicago wheat futures finished down 4.1%, at $4.07 ½ a bushel, a fresh 10-year low for the second month contract.
December wheat futures in Kansas City fell 3.7%, to finish at a six-week low of $4.16 ¼ a bushel.
ProFarmer results released
Friday afternoon sees the final results of the ProFarmer crop tour, which has been surveying US corn and soybeans this week.
The tour has been suggesting lower corn yields than those forecast in the August Wasde report, which were a whopping 175.1 bushels per acre, although still very large.
Speaking ahead of the final ProFarmer report, but taking into account the results from the tour, Dr Michael Cordonnier told Agrimoney that “nothing from the tour dissuades me of the fact that the August Wasde was the high water [for yield forecasts] this year”.
Heavy soybean count
But Dr Cordonnier noted that Pro Farmer’s pod counts for soybeans have been very large.
“August has been very good for the soybeans,” he noted.
“No soybeans are suffering from lack of moisture.”
“We’ve been getting wetter as we go through August,” Dr Cordonnier said, “and we’ll get wetter again”.
Although this rain may cause “a little bit of disease here and there,” Dr Cordonnier said that
Corn falls under pressure from wheat
And the weather models are looking better for soybeans than corn prospects as well.
The Central and Western Midwest is forecast to be wet over the next 15 days.
Kyle Tapley, at MDA Weather Services set the weather in the region would “favour late growth of soybeans, but will slow corn maturation and may lead to some areas of wetness”.
But corn came under pressure from plummeting wheat.
December corn futures finished 2.0% down, at $3.25 a bushel, at a ten-year low.
November soybeans finished down 0.9% on the day, at 9.67 ¼ a bushel.
Sugar remains very range bound
Raw sugar remains very range bound, having bounced around between 19 and 21 cents for weeks.
“Fundamental news is scarce,” noted Nick Penney, at Sucden Financial.
“The market seems to be bogged down, able to rock back and forth, but unable to sustain momentum in either direction,” said Tobin Gorey, at CBA.
October raw sugar settled up 0.3%, at 20.61 cents a pound.
(Source – http://www.agrimoney.com/marketreport/pm-markets-wheat-futures-plunge-to-new-10-year-lows–3743.html)