Wheat eases as US crop rating improves
Tuesday, 09 April 2013
By Muhammad Iqbal
PARIS: Chicago wheat edged lower on Tuesday, snapping two consecutive sessions of gains and falling from a nearly two-week high as improvement in US winter crop ratings weighed on the market.
Corn rose for a second day in row as wet weather in key growing areas across the US Midwest threatened to delay the start of planting this week.
US winter wheat condition ratings improved in the latest week but hovered at the lowest level for this time of year since 2002, the US Department of Agriculture’s weekly crop progress report showed.
The USDA said 36 percent of the US winter wheat crop was rated in good to excellent condition, up from 34 percent a week earlier.
“Wheat prices were being supported by harsh US winter which was hurting the wheat crop,” said Joyce Liu, an analyst at Phillip Futures. “With the improvement in wheat crop condition, I think some of those fears have eased.”
The southern US Plains have struggled with drought since before the winter crop was seeded last autumn, although recent storms have brought relief to some areas.
Farmers in the region produce hard red winter wheat. Ratings showed more improvement in the Midwest, which produces soft red winter wheat.
Chicago Board of Trade May wheat slid 0.31 percent to $7.10-1/4 a bushel by 1040 GMT, after hitting its highest since March 28 at $7.16 on Monday when strong demand for US supplies led by China underpinned prices.
China bought 14 to 16 cargoes of US wheat on Thursday for delivery from June to December, said the China National Grain and Oils Information Center, an official think tank. The announcement confirmed rumours that supported wheat prices last week.
Among other grains, May corn added 0.87 percent to $6.39 a bushel and May soybeans gained 0.11 percent to $13.79-1/2 a bushel.
Chicago corn futures are being buoyed by planting delays due to wet weather in places such as Illinois and Iowa.
Widespread rainfall in the US Midwest and Plains this week will add valuable soil moisture in drought-stricken areas but also stall spring fieldwork and prevent early corn seedings, an agricultural meteorologist said on Monday.
Another round of wet weather is expected in the crop region early next week, further slowing corn plantings.
Prices are expected to be supported by Chinese corn demand forecast at a record volume in the next marketing year, as the world’s second-largest consumer takes advantage of a fall in global prices and after the domestic crop suffered damage from mould and wet weather delayed plantings.
The soybean market found support from bargain-hunters after prices on Friday dropped to their lowest level since June.
Investors in the soybean market are also keeping a close watch on China, where an outbreak of bird flu, which prompted the culling of tens of thousands of birds, could possibly hurt chicken consumption and reduce demand for feed grains.
“While we have previously argued that a decline in grain prices in Q2-2013 was imminent, we are now moderately bullish on corn, soybeans and wheat following the sharp deterioration in their prices in the past week,” Standard Chartered said in a note.
It said that the bird flu outbreak in China provided a buying opportunity for grains, which had already fallen sharply late March following the release of bearish USDA stocks data.
Traders eyes will now be on the USDA’s supply and demand report due to be released at 1600 GMT on Wednesday.
“Tomorrow’s (USDA) report will confirm or deny the relatively low US stock levels compared to expectations estimated end-March.
Meanwhile the market is prudent and operators are avoiding risk,” Alexis Poullain, analyst with Agritel consultancy, said.
European wheat prices were down slightly with Paris-based May off 0.3 percent at 245.00 euros a tonne. Source Reuters.
Published: Zarai Media Team