Grain futures mixed, wheat hovers around 18-month lows

Grain futures were mixed on Tuesday, with wheat hovering around the lowest since June 2012 amid expectations for a record global harvest. Soybeans declined, while corn advanced for the day.

On the Chicago Board of Trade, wheat futures for settlement in March traded little changed at $6.2213 per bushel at 13:43 GMT, losing 0.01% on a daily basis. Prices jumped to a session high of $6.2512, while day’s bottom was touched at $6.2112 per bushel, the same as yesterday and the lowest since June 18th 2012. The grain lost 0.7% last week, after declining 6.0% in the preceding two 5-day periods. Wheat has slumped 19% so far this year on increased expectations for global production.

On December 10th, the USDA raised its November forecast before the start of the Northern Hemisphere harvests in 2014 to 182.78 million tons, up from 178.48 million tons. The revision was mainly due to the higher-than-expected Canadian and Australian harvests compared to a year ago.

DTN’s December 16th forecast called for a variable temperature trend in the Midwest during the next 7 to 10 days. Northern areas will continue to experience below to much below-normal temperatures, while western and southern areas will have a milder pattern. Next week, cold temperatures may be accompanied by rain and freezing precipitation. The well-established winter wheat crop in the Southern Plains is now dormant and will remain so. The region will experience a significant warming this week, which will be followed by colder conditions during the seven to ten days. The rapid change of temperatures deserves attention, as cold temperatures may harm the winter wheat crop. Meanwhile, the weather in Ukraine and South Russia wheat areas is expected to be warm during the week, which is favorable for the winter wheat and oilseeds. However, it is possible that the high temperatures might melt some of the protective snow cover.

Soybeans futures for settlement in January traded at $13.3388 per bushel at 13:44 GMT, declining 0.26% on a daily basis. Prices swung between day’s high and low of $13.3788 and $13.2862 per bushel. The oilseed added 0.19% last week after gaining 0.11% in the preceding one. On December 10th, soybeans reached $13.5338, the strongest level since September 19th.

Corn down as well

Corn futures for March delivery were mostly unchanged to trade at $4.2363 a bushel by 13:43 GMT, advancing 0.05% for the day. Futures held in a range between day’s high and low of $4.2488 and $4.2212 per bushel. Yesterday, prices touched $4.2063, the lowest since December 2nd. Corn lost 2.2% last week, after gaining 2.6% in the preceding two 5-day-periods.

Corn prices advanced, but gains were limited amid speculations for a slowdown in demand for the grain by ethanol producers, after a group of US senators introduced a bipartisan bill to eliminate the corn ethanol mandate. Prices were also pressured by declining Chinese demand and amid global corn glut.

Last week, the Asian country blocked another US corn cargo, containing the unapproved genetically modified insect-resistant MIR 162 substance. Since mid-November, China, the second-largest corn consumer, rejected a total of five US corn cargoes.

The US Department of Agriculture reported on December 10th that world corn output in the year beginning October 1st is projected to be 964.28 million metric tons, compared to a 962.83 million forecast in the previous month and up from last year’s 862.88 million metric tons. The agency added that at the end of the marketing year (August 31st), the US surplus may reach 1.792 billion bushels, down from 1.887 billion forecast in November, but well above last year’s 824 million bushels, which is 118% less than the projected US surplus for next year.