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GRAINS-Tumble as sentiment weakens, wheat at 2-week low

Published 04/14/2011, 12:05 PM
Updated 04/14/2011, 12:08 PM
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* Grain markets going through a long-liquidation phase

* Added weight on wheat from Plains rain forecast

* Waning soy crush, exports weighing on soybeans

* Corn fundamentals bullish but profit-taking weighs

* Coming up: US planting weather, Plains rains eyed (Recasts, updates prices, market activity; new byline, changes dateline, previously SINGAPORE/MADRID)

By Sam Nelson

CHICAGO, April 14 (Reuters) - U.S. grain markets tumbled on Thursday, with wheat futures plumbing a two-week low as investors cashed out profits amid forecasts for rain in drought-hit areas of the U.S. Plains.

Wheat, corn and soybean futures markets, loaded with net long positions by speculators, remained under pressure from a Goldman Sachs recommendation to clients this week to bank profits on crude oil and some other commodities.

A Chicago Board of Trade floor broker said if it were not for climbing crude oil prices, grains prices would fall further.

"I think investors are losing some or their enthusiasm for ownership of commodities" in general, he said.

Crude oil turned firm after falling in early dealings and its volatility was unnerving some potential investors in grain and soy.

Soybeans slipped to a one-month low on signs of slowing U.S. demand for the oilseed and puny export sales of U.S. soy.

Corn was finding spillover selling pressure from falling wheat and soybeans despite soggy weather that is slowing early corn seedings and despite continued robust export sales of U.S. corn at prices near record highs.

"We've had the rain forecasts for the wheat belt for two days in a row now, so that's obviously pressuring the wheat market," said Rich Nelson, research director for Illinois advisory and research firm Allendale, Inc.

Dry weather has been stressing the wheat crop in the Plains, causing irreparable damage to portions of it. But rains will nourish some of the crop ahead of its critical growing season.

Telvent DTN weather forecaster Mike Palmerino told Reuters global ag forum the major shift in the weather pattern for the central United States will bring beneficial rains to the wheat crop in Kansas, Nebraska and Colorado Thursday and again early next week. Oklahoma and Texas will miss out, Palmerino said.

US SOY CRUSH AND EXPORTS WANING

Soybean futures were floundering as U.S. soybean crushers slow down their processing of soy into soymeal and soyoil due to a buildup of supply of each product as end-users enjoy a glut of soy and soy product this season from Brazil and Argentina.

"Soybeans have a domestic problem," Nelson said. "The NOPA crush was down 10 percent from a year ago and we think USDA will have to lower their crush forecast by 20 million bushels."

The National Oilseed Processors Association (NOPA) said the U.S. soy crush in March totaled 134.391 million bushels, above an average of analysts' estimates for 133.19 million but well below March last year of 149.627 million bushels.

Mary Ann Kwiatkowski, of Amber Trading, attributed the losses to long liquidation, adding that the NOPA March soymeal export numbers were "bad for soybeans."

NOPA reported March soymeal exports at 518,861 tons, down from 663,586 tons in February.

Analysts said soybean crush margins soon will come under renewed pressure from bumper South American crops and on competition from distillers dried grain.

"Today's bean export number was low so we'll have to see if sales can keep up with USDA's projection," Nelson said.

USDA on Thursday said export sales of U.S. soybeans last week totaled just over 79.0 million tonnes, below estimates for 100.0 to 400.0 million. (Reporting by Sam Nelson; additional reporting by Suzanne Cosgrove and Michael Hirtzer in Chicago; Editing by David Gregorio)

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