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Grain futures - Wheat bounces off 5-month low on bargain buying

Published 12/13/2012, 05:34 AM
Investing.com - U.S. grain futures were mixed during European morning hours on Thursday, with wheat prices regaining strength as investors returned to the market to seek cheap valuations after prices fell to a five-month low.

Gains were limited as market players continued to digest Tuesday’s bearish U.S. Department on Agriculture Supply and Demand report.

On the Chicago Mercantile Exchange, wheat for March delivery traded at USD8.1488 a bushel, up 0.45% on the day.

The March contract lost as much as 0.5% earlier in the session to hit a daily low of USD8.0712 a bushel, the weakest level since July 11.

Wheat futures have been under heavy selling pressure in recent sessions after the USDA raised its estimate on U.S. wheat ending stocks to 754 million bushels earlier in the week, up 6.6% from its November projection of 704 million bushels.

The upward revision reflected slow pace of U.S. export sales.

The agency also increased its forecast for global wheat ending stockpiles to 176.95 million tonnes, up from the November’s estimate of 174.18 million tonnes and above market expectations of 175.68 million.  

The USDA upgraded its view on wheat crops in Canada, Australia and China, easing concerns over a disruption to global supplies.

Meanwhile, corn futures for March delivery traded at USD7.2412 a bushel, down 0.15% on the day. The March contract fell to a daily low of USD7.2188 a bushel earlier in the day.

Corn prices fell to a four-week low of USD7.1937 a bushel on Wednesday after the USDA left its forecast for U.S. corn ending stocks unchanged at 647 million bushels, compared to expectations for an increase to 663 million bushels.

The department also left its estimate of 2012-13 U.S. corn exports unchanged at 1.15 billion bushels.

The USDA raised its estimate on China's 2012-13 corn crop to 208 million tonnes, up from 200 million projected in November. The agency also trimmed its forecast for Argentina's corn crop to 27.5 million tonnes from 28 million estimated last month.

Elsewhere, soybeans futures for January delivery traded at USD14.7238 a bushel, little changed on the day. The front-month contract traded in a range between USD14.6512 a bushel, the daily low and a session high of USD14.7438 a bushel.

The USDA cut its estimate on U.S. ending soybean stocks to 130 million bushels, down from 140 million in November and in line with market expectations.

The agency also left unchanged its forecast of soybean production in Brazil at a record-high 81 million tonnes. Its Argentine soy crop forecast also was unchanged at 55 million tonnes.

South America is a major soy exporter and competes with the U.S. for business on the global market. An upbeat crop outlook in countries in that region could mean decreased demand for U.S. supplies.

Corn is the biggest U.S. crop, followed by soybeans, government figures show. Wheat was fourth, behind hay.

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