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Wheat, Corn Futures Pare Impressive Gains After USDA Report

June 13, 2018 at 15:57 by Andrew Moran

Wheat futures are paring their impressive gains from Tuesday as they have tumbled as much as 3% midweek. One day after the US government reported tighter supplies of both corn and wheat, investors sold off the commodities and took profits.

July wheat futures plummeted $0.145, or 2.71%, to $5.1975 per bushel at 15:34 GMT on Wednesday on the Chicago Board of Trade (CBoT). On Tuesday, wheat prices settled at their best levels in two weeks and they are up nearly 15% year-to-date.

July corn futures slipped $0.0125, or 0.33%, to $3.762 a bushel. Corn prices have traded in the opposite direction of wheat in recent months, declining about 5% since March. Year-to-date, corn is up 2.3%.

According to the US Department of Agriculture (USDA)‘s World Agricultural Supply and Demand Estimates report, corn output is estimated to be 1.577 billion bushels for the 2018–2019 crop year, a revision of 105 million. This will be the lowest production volume since the 2013–2014 crop year. The USDA also slashed projections for the 2018–2018 season by nine million bushels to 946 million.

Like soybean stockpiles, corn inventories are expected to dip year-on-year by roughly 25%, tightening the corn balance sheet. Corn prices might rise, though, amid changes to weather patterns and growing regions across the globe.

The overall grain market looks completely different from 2013, buoyed by growing demand, weather issues, and closing gap in the international grain balance sheet.

US wheat farmers have been unable to take full advantage of the rally in prices. Because of the global supply glut, multiple droughts, and growing foreign competition, farmers in the Plains are transitioning to cotton since it requires fewer amounts of water and is easier to plant.

In other agricultural commodities, July soybean futures fell $0.14, or 1.47%, to $9.40 per bushel. July orange juice futures slid $0.01, or 0.65%, to $1.535 per pound. July coffee futures dropped $0.06, or 0.50%, to $1.1189 a pound.

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