Grain futures mixed, with wheat touching the lowest since June 2012

Grain futures were mixed on Monday, with wheat touching the lowest since June 2012 amid expectations for a record global harvest. Prices were pressured by the lowering probability of winter-kill on the grain as weather forecasting models called for snow across the US wheat producing regions. Corn was down as well, while soybeans advanced for the day.

On the Chicago Board of Trade, wheat futures for settlement in March traded at $6.2513 per bushel at 14:53 GMT, losing 0.55% on daily basis. Prices jumped to a session high of $6.2862, while day’s bottom was touched at $6.2412 per bushel, 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 slumped 19% so far this year on increased expectations for global production.

According to the USDA, global wheat production is heading for an all-time high of 711.42 million metric tons.

“We’re really out of production-risk area, we’re largely near or moving into dormancy for the Northern Hemisphere wheat crops, so for the next six weeks or so there’s really unlikely to be too much that can hurt.” said Michael Pitts, a commodity sales director at National Australia Bank Ltd., cited by Bloomberg.

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 13th forecast called for very low temperatures, with snow and some mixed precipitation over the southern and eastern areas of the Midwest. The well-established winter wheat crop in the Southern Plains is now dormant and will remain so. So far there is no damaging cold, but the situation deserves attention, as significantly cold weather is still encompassing Canada. Precipitation trends will mainly focus on southeastern areas, with only limited activity in the west. Meanwhile, the weather in Ukraine and southern Russia crop areas will turn to cold, but before that snow precipitations will cover the wheat, protecting it from the freezing temperatures. Milder weather is expected later during the week.

Soybeans futures for settlement in January traded at $13.2988 per bushel at 14:53 GMT, advancing 0.19% on a daily basis. Prices swung between day’s high and low of $13.3162 and $13.1912 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 for March delivery declined 0.69 percent to $4.2163 a bushel by 14:55 GMT. Futures held in a range between day’s high and low of $4.2638 and $4.2112 per bushel, the lowest since December 2nd. Corn lost 2.2% last week, after gaining 2.6% in the preceding two 5-day-periods.

Corn prices plunged on 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 pressured also 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.