US MIDDAY: wheat extends losses
December 13, 2012
US wheat futures fell for a fourth straight session on Wednesday, falling to a five-month low and adding to Tuesday’s loss of more than 3 percent after the US government forecast hefty stockpiles. Corn futures posted light losses a day after setting a three-week low, while soyabeans fell on optimism about South American crop prospects.
However, all three commodities pared early losses on expectations the US Federal Reserve will announce a fresh round of bond buying to stimulate a fragile economic recovery. “I think we are getting position-squaring before Bernanke speaks at 11:30. That’s leading to a little bit of short-covering,” said Sterling Smith, futures specialist with Citigroup in Chicago. Expectations are running high that the Fed will unveil plans to buy $45 billion more bonds every month, on top of the $40 billion it announced in September.
At the Chicago Board of Trade as of 10:05 am CST (1605 GMT), most-active March wheat was down 5-1/2 cents at $8.16 per bushel after falling to $8.09, just above chart support at its 200-day moving average at $8.07. Front-month December wheat dipped to $8.00, its lowest level since July 11. CBOT March corn was down 2-3/4 cents at $7.25-1/4 a bushel and January soyabeans were down 6 cents at $14.66 a bushel.
Grains continued to suffer one day after the USDA raised its estimate of US 2012/2013 wheat ending stocks to 754 million bushels, 50 million bushels more than its November estimate and above market expectations. The USDA also increased its forecast for global wheat inventories to almost 177 million tonnes from 174 million in November and well above market projections following estimates of larger crops from Australia, Canada and China.
“Chicago wheat on Tuesday … got tipped out of the trading range we have been in since around late July,” said Ole Hansen, head of commodity strategy at Saxo Bank. Soyabeans were under pressure from forecasts for favourable crop weather in Brazil, which is projected as the world’s biggest soya producer. The USDA on Tuesday left its forecast for Brazil’s soyabean harvest unchanged at a record-large 81 million tonnes, and the Brazilian government has forecast the crop at 82.6 million tonnes. Underpinning the market, the USDA on Tuesday kept its US corn stocks estimate at 647 million bushels, the smallest in 17 years, reflecting the impact of the worst drought in half a century this year.