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Wheat leads corn, soybeans lower post-WASDE report

12/10/2013 @ 3:03pm

Wheat futures fell to the lowest in nearly three months on Tuesday after the U.S. Department of Agriculture forecast higher-than-expected domestic and global supplies of the grain. Corn and soybeans also fell.

In its monthly crop report, the USDA said domestic wheat stockpiles will total 575 million bushels at the end of the current marketing year on May 31, up 1.8% from its estimate in November. Analysts had expected the government to cut its supply forecast, but the USDA said it raised the figure because it expects the U.S. to import more wheat from Canada amid record output by its northern neighbor.

The USDA also projected that global wheat inventories will be higher than analysts had expected. The government forecast world supplies at 182.8 million metric tons, 2.4% higher than its estimate a month earlier, citing higher production by Canada and Australia. Analysts had expected the USDA to forecast world stockpiles at 178.8 million tons.

The USDA raised its forecast for Canadian production to a record 37.5 million tons in Tuesday's report, on par with a Statistics Canada projection last week. Australian output will total 26.5 million, the USDA said. Australia last week forecast production at 26.2 million ton, the third-most ever.

"Those big world numbers--that's all anybody focused on," said Mike O'Dea, a Kansas City, Mo.-based risk management consultant at brokerage INTL FCStone. "We we're looking for that increase" in world production.

Wheat futures for December delivery dropped 9 1/2 cents, or 1.5%, to $6.29 1/2 a bushel on the Chicago Board of Trade, the lowest closing price for a front-month contract since Sept. 13. March futures fell 11 3/4 cents, or 1.8%, to $6.38 3/4 a bushel.

The USDA didn't change its forecast for U.S. wheat exports in the current season, unexpectedly leaving its projection at 1.1 billion bushels. Exports have been stronger than usual, due partly to recent declines in U.S. prices, which are down 18% this year.

Soybeans fell and corn dropped for the first time in three sessions as investors shrugged off the USDA report that forecast lower-than-expected domestic stockpiles of both commodities.

Soybeans for January delivery fell 5 1/2 cents, or 0.4%, to $13.38 1/4 a bushel in Chicago trading, after reaching the highest price in nearly three months.

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