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GRAINS-U.S. wheat and corn to 3-week lows ahead of USDA report
December 10, 2012 / 1:02 PM / 5 years ago

GRAINS-U.S. wheat and corn to 3-week lows ahead of USDA report

* Wheat off on technicals, lack of major U.S. export sales
    * Traders adjusting positions ahead of monthly USDA data
    * Corn sags as S. Korea feedmaker bars US corn from tender
    * Soybeans end higher in choppy trade ahead of USDA report

 (Updates with closing U.S. prices)
    By Julie Ingwersen
    CHICAGO, Dec 10 (Reuters) - U.S. wheat futures fell to a
three-week low on Monday, hit by chart-based selling as well as
concerns that U.S. export business is falling short of
forecasts, analysts said.
    Corn futures also hit a three-week low, extending a
three-session skid, while soybeans e nded higher after a seesaw
session ah ead of a monthly crop report from the U.S. Department
of Agriculture.
    At the Chicago Board of Trade, CBOT March wheat fell
12-1/4 c ents t o settle a t $8.48 -3/4 a bushel. March corn 
en ded down 7-1/4 ce nts at $7.30 a bushel, while J anuary soybeans
 set tled up 2-1/2 cen ts at $14.74- 3/ 4 a bushel. 
    Wheat posted the biggest percentage loss, pressured by
technical selling and caution ahead of Tuesday's USDA crop data.
The trade expects USDA to slightly raise its forecast of U.S.
20112/13 wheat ending stocks, due in part to thin export demand.
 
    Selling accelerated as the benchmark CBOT March wheat
contract fell below chart support at $8.51-1/2, a level
that had held for four straight sessions last week. The contract
dipped to an intra-day low of $8.46-3/4, its lowest level in
three weeks. 
    Weekend news included wheat purchases by Saudi Arabia and
Iraq, but traders said the United States won only a small share
of the business.
    The drop in CBOT futures reflected "continued disappointment
and concern about the U.S. export program, and the possibility
that we will raise ending stocks," said Shawn McCambridge,
grains analyst with Jefferies Bache in Chicago.
    "If we increase (U.S.) ending stocks, it offsets some of
that possible concern about next year's production levels,"
McCambridge said, acknowledging poor conditions in the southern
U.S. Plains winter wheat belt.
    The U.S. hard red winter wheat crop, already weakened by dry
conditions in the Plains, is facing a threat this week from
damaging cold weather, a factor that limited losses in hard red
winter wheat futures on the Kansas City Board of Trade.
 
    On the export front, Saudi Arabia bought 295,000 tonnes of
hard wheat from the European Union, Australia and the United
States, while Iraq bought 350,000 tonnes of wheat from Australia
and Romania.
    Argentina will allow only 4.5 million tonnes of wheat
exports this campaign, against 6 million previously planned, in
response to a rain-plagued harvest, a local newspaper reported.
  
    And the USDA confirmed that private exporters sold 115,000
tonnes of U.S. wheat to Egypt, including 60,000 tonnes of soft
red winter wheat and 55,000 tonnes of soft white wheat. However,
traders said the market had already factored in the news.
 
    
    CORN FALLS AHEAD OF MONTHLY USDA REPORT
    Traders noted long liquidation in CBOT corn a day ahead of
the U.S. Department of Agriculture's monthly supply/demand
reports. Analysts expect USDA to raise its forecast of U.S. corn
ending stocks for 2012/13 due to weak export demand.
 
    Underscoring the concerns, USDA reported export inspections
of U.S. corn in the latest week at 7.861 million bushels, below
a range of trade estimates for 9 million to 15 million.   
    Further pressure stemmed from news that a South Korean
feedmaker issued an international tender for corn and feed wheat
but excluded corn from the United States, the world's biggest
supplier.    
    "Some are saying it's because of U.S. corn quality, not just
price," Mike Zuzolo, president of Global Commodity analytics in
Lafayette, Indiana, said of the snub. "I think that added
another layer of bearishness heading into the (USDA) report, and
reinforced the pre-report nervousness about what USDA may say as
far as reduced demand."
    Severe drought in the heart of the U.S. Corn Belt this
summer contributed to the spread of aflatoxin, the toxic
byproduct of a mold that tends to spread in corn in drought
years.
    Soybean futures settled modestly higher after a
back-and-forth session in which t raders adjusted positions ahead
of USDA's monthly data. Analysts expect USDA to lower its
forecast of U.S. 2012/13 soybean ending stocks to 130 million
bushels, from 140 million in November.
    In a bearish technical signal, benchmark January soybeans
 set a one-month high on Friday but then reversed and
closed below the previous session's low on profit-taking.
    Firm cash markets for U.S. soybeans amid historically strong
crush margins and robust export demand have helped drive a
three-week rally in nearby soybean futures. But favorable crop
weather in Brazil has boosted prospects for a record-large crop
in that country, with harvest expected in early 2013.

 (Additional reporting by Valerie Parent in Paris and Mayank
Bhardwaj in New Delhi; editing by Jason Neely, Sofina
Mirza-Reid, Jim Marshall and Marguerita Choy)

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