by Mark Weinraub
(Reuters) – Wheat futures fell Wednesday, with the benchmark Chicago Board of Trade contract dropping 2.9 percent, on forecasts for good crop weather in the U.S. Plains, said traders who also cited a firmer dollar.
Supply concerns buoyed soybean futures as last week’s smaller-than-expected acreage forecast from the U.S. Agriculture Department raised concerns that this year’s harvest may not provide enough soy to meet demand. Crop short falls in South America also lent support.
Corn futures closed slightly lower on expectations for good planting weather around the U.S. Midwest during the next few weeks. Pressure from the wheat market also weighed on corn.
A firming dollar, which makes U.S. commodities less attractive to overseas buyers and reduces their effectiveness as a hedge against inflation, also contributed to wheat’s declines.
“With the dollar being almost 40 points higher … that is putting a lot of pressure on the wheat,” said Ted Seifried, senior market analyst with the Zaner Group. “Of all the grains, the wheat is the most affected because of the fact that it has the weakest fundamentals.”
CBOT May wheat ended down 18-3/4 cents at $6.39-1/4 a bushel. The benchmark contract dropped through a key technical support level at its 100-day moving average on Wednesday.
“The weather forecast still looks pretty good for the winter wheat belt,” said Greg Grow, director of agribusiness at Archer Financial Services. “That may have caused some of the recent longs to exit the market. We have just got very little in the way of fresh bullish news (for wheat) unless you throw some kind of weather event at it … but none of that seems to be in the offing.”
CBOT May corn settled 1-1/2 cents lower at $6.56-3/4 a bushel.
CBOT May corn ran into resistance near its 200-day moving average of $6.64-1/4. The May contract briefly breached that key technical resistance point on Tuesday.
CBOT May soybeans rose 2-3/4 cents to $14.19-1/2 a bushel. The front-month contract was still below the seven-month peak of $14.34-1/4 hit on Tuesday.
“The balance sheet there is tight enough through the end of the year that it is going to be very difficult to break that old-crop corn,” Seifried said. “Beans… with the planted acreage that the USDA is suggesting, we could be looking at a zero carryover. Beans, especially new-crop beans, are going to remain very strong.”
Informa pegged the Brazilian soy crop at 66.5 million tonnes, down from its previous estimate of 68 million, trade sources said. It also cut its Argentine soybean production outlook to 45 million tonnes from 47.5 million.
Informa estimated the 2012/13 U.S. winter wheat crop at 1.631 billion bushels, up from 1.494 billion a year earlier, adding further pressure to the wheat market.
Rainfall covered much of the U.S. Plains hard red winter wheat region this week, giving a further boost to the crop that already has entered the growing season with high ratings, said Andy Karst, meteorologist for World Weather Inc.
“Most of the Plains is in good shape now,” Karst said.
Karst added that drier weather in the next couple of weeks should boost early plantings of the 2012 U.S. corn crop, adding further pressure to new-crop corn amid expectations for the largest seedings in 75 years.
The U.S. dollar rose to a three-week high against the euro on Wednesday after European Central Bank President Mario Draghi said the euro zone economic outlook is subject to downside risks relating to commodity prices as well as the debt crisis.
Posted by Haylie Shipp