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U.S. grain futures sharply lower on fund selling amid larger supplies

Staff Writer |
Chicago Board of Trade (CBOT) grain futures traded sharply lower in the trading week ending on March 8, due to massive fund selling amid larger supplies and lower yearly export estimates.

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The most active corn for May delivery was down 8.75 cents, or 2.35 percent weekly, to settle at 3.6425 dollars per bushel. May wheat was down 17.75 cents, or 3.88 percent, to close at 4.395 dollars. March soybeans were down 15.75 cents, or 1.73 percent, to settle at 8.9575 dollar per bushel.

In the monthly supply and demand report released this week by the U.S. Department of Agriculture (USDA), the estimates for global wheat supplies were reduced, primarily on lower production forecasts for Kazakhstan and Iraq. However, USDA forecast larger U.S. wheat supplies, lower exports, reduced domestic use, and higher ending stocks for 2018/19 marketing year.

U.S. exports have been lowered by 35 million bushels to 965 million with reductions in hard red spring and white wheat on stronger-than-expected export competition from other countries.

With massive selling in wheat and corn, bearish momentum continued this week in CBOT grains, despite relatively good performance in the latest weekly export sales report.

The USDA confirmed on Thursday that for the period of February 22-28, exporters reported 826,700 metric tons of wheat sales during the same period, compared with the trade's expectations of between 200,000 and 550,000 metric tons.

But the latest upbeat export figures were not enough to support CBOT wheat, which posted significant losses in the fifth consecutive week.

"We're seeing forced liquidation and just a snowball effect as we continue to roll over very hard as selling accelerates," said Oliver Sloup, a market analyst with Blue Line Futures.

CBOT corn ended the week with another more-than-two-percent fall, as USDA's march outlook lowered U.S. corn used for ethanol, reduced exports forecast, and raised ending stocks for the 2018/19 marketing year.

U.S. corn exports have been reduced by 75 million bushels to 2.375 billion, reflecting diminished U.S. price competitiveness and expectations of increased exports for Brazil and Argentina. USDA has raised corn ending stocks by 100 million bushels to 1.835 billion.

As for soybeans, in its March supply and demand estimates report, the USDA lowered U.S. 2018/19 soybean ending stocks by 10 million bushel to 900 million bushel due to raised soybean crush. However, it raised global oil seed ending stocks by 0.8 million tons to 121.7 million tons, with soybeans accounting for 0.5 million of the increase.

In another related development, the USDA confirmed on Friday that private exporters reported export sales of 664,000 metric tons of soybeans for delivery to China during the 2018/2019 marketing year.

Neither the lowered ending U.S. stocks nor the latest export sales were able to push up CBOT soybean futures, as market participants anxiously await the final outcome of the U.S.-China trade talks.

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