GRAINS-Wheat extends losses on forecasts for hefty stockpiles

Thu Dec 13, 2012 3:11am IST

* Wheat to 5-mo. low a day after USDA raises stocks view
    * Corn pressed by wheat's fall, poor exports, ethanol data
    * Soybeans mixed; firm cash market lifts nearbys
    * Little response to Federal Reserve stimulus announcement

 (Updates with closing U.S. prices)
    By Julie Ingwersen
    CHICAGO, Dec 12 (Reuters) - U.S. wheat futures declined for
a fourth straight session on Wednesday, setting a five-month low
and adding to Tuesday's loss of more than 3 percent after the
U.S. government forecast hefty stockpiles.
    Corn fell to a 3-1/2 week low, while soybeans closed mixed
as firm cash markets supported the nearby contract.
    At the Chicago Board of Trade, most-active March wheat 
fell 9-1/2 cents to settle at $8.12 per bushel after dipping
to$8.09, just above chart support at its 200-day moving average
near $8.07.
    Front-month December wheat ended at $7.94-3/4, the
lowest spot price since July 11.
    CBOT March corn settled down 2-1/2 cents at $7.25-1/2
a bushel while January soybeans closed up 1-1/2 cents at
$14.73-1/2 a bushel.
    Grains continued to sag one day after the U.S. Department of
Agriculture raised its estimate of U.S. 2012/2013 wheat ending
stocks to 754 million bushels, 50 million bushels more than its
November estimate, due to the slow pace of exports.
 
    The USDA also raised its forecast for global wheat
inventories to almost 177 million tonnes from 174 million in
November and above market projections following estimates of
larger crops from Australia, Canada and China. 
    The bearish data on Tuesday knocked CBOT March wheat 
out of a trading range it had been in since July, triggering
technical selling that continued on Wednesday.
    "Wheat is just trying to price itself as a feed grain. If
you can't export it, it's going to price itself into feed," said
Dan Cekander, analyst with Newedge USA in Chicago.
    Wheat competes in the feed market with corn. The premium for
spot CBOT wheat over corn fell to 73-3/4 cents per
bushel at midday Wednesday, from $1.06 ahead of USDA's report.  
    Grain markets had little reaction after the U.S. Federal
Reserve announced plans to ramp up its stimulus to the economy,
although U.S. stocks rose and the euro rallied against the
dollar following the news. 
    The central bank committed to monthly purchases of $45
billion in Treasuries on top of the $40 billion per month in
mortgage-backed bonds it started buying in September. In a
surprise move, the Fed also adopted numerical thresholds for
policy, a step that had not been expected until early next year.
 
    
    CORN FALLS FOR FIFTH STRAIGHT SESSION
    CBOT corn sagged in sympathy with the declines in wheat, as
well as slow export demand, posting its fifth loss in as many
sessions. 
    South Korea's largest feed maker, NOFI, previously a loyal
U.S. corn buyer, bought South American and South African corn in
a major tender in a new strategy to diversify supply sources.
 
    Also, data from the U.S. Energy Information Administration
showed U.S. production of corn-based ethanol in the latest week
fell to 824,000 barrels per day, down 1.3 percent from a week
earlier, while stockpiles rose to 20 million barrels, up 3.6
percent.
    "I don't think the corn bulls like the build in weekly
ethanol stocks," Cekander said.
    Underpinning the market, the USDA on Tuesday kept its U.S.
corn stocks forecast at 647 million bushels, the smallest in 17
years, reflecting the impact of the worst drought in half a
century this year.
    Soybean futures ended mixed. Firm cash values for soybeans
in the U.S. Gulf export market as well as the interior Midwest
helped lift nearby contracts. 
    But deferred contracts were pressured by forecasts for
favorable crop weather in Brazil, which is projected as the
world's biggest soy producer. The USDA on Tuesday left its
forecast for Brazil's soybean harvest unchanged at a
record-large 81 million tonnes, and the Brazilian government has
estimated the crop at 82.6 million tonnes.
    Weather forecasts called for beneficial rains in southern
crop areas of Brazil over the next two weeks.
    "Brazil looks good, favorable as a whole, and there is an
improving trend in Argentina, but not perfect. Occasional
showers will set back planting, but we won't see the big soaking
rains that they've been having," said Andy Karst, meteorologist
for World Weather Inc.
    
    
    
 Prices at 2:50 p.m. CST (2050 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  725.50    -2.50  -0.3%   12.2%
 CBOT soy                  1473.50     1.50   0.1%   22.9%
 CBOT meal                  452.00     3.90   0.9%   46.1%
 CBOT soyoil                 49.54    -0.66  -1.3%   -4.9%
 CBOT wheat                 812.00    -9.50  -1.2%   24.4%
 CBOT rice                 1534.50   -17.50  -1.1%    5.1%
 EU wheat                   261.00    -0.75  -0.3%   28.9%
 
 US crude                    86.78     0.99   1.2%  -12.2%
 Dow Jones                  13,242       -6  -0.1%    8.4%
 Gold                      1711.31     1.46   0.1%    9.4%
 Euro/dollar                1.3065    0.006   0.5%    0.9%
 Dollar Index              79.8870  -0.1740  -0.2%   -0.4%
 Baltic Freight                826      -74  -8.2%  -52.5%
 

 (Additional reporting by Michael Hogan in Hamburg and Manolo
Serapio Jr in Singapore; Editing by Helen Massy-Beresford, Peter
Galloway, Jim Marshall and Sofina Mirza-Reid)
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