Wheat Eases as Better Supply Outlook Weighs; Corn and Soybeans Steady

By Gus Trompiz and Naveen Thukral

PARIS/SINGAPORE, Nov 27 (Reuters) – Chicago wheat futures edged lower on Wednesday as a technical bounce from the previous session petered out in the face of improving crop prospects in major production zones worldwide.

Corn and soybeans ticked up as the markets assessed the possible impact of U.S. President-elect Donald Trump’s threat of tariffs against major trading partners when he takes office on Jan. 20.

A drop in the dollar <.DXY> and a rise in crude oil <LCOc1> lent some support to grains as participants adjusted positions before Thursday’s closure for the U.S. Thanksgiving holiday.

The most-active wheat contract on the Chicago Board of Trade (CBOT) <Wv1> was down 1.0% at $5.52-1/4 a bushel by 1137 GMT, giving back gains from Tuesday when it broke a three-day slide.

While a clutch of tenders by importers and uncertainty over Black Sea export supply helped underpin wheat, supply pressure continued to keep prices within distance of a four-year low struck in late July. [GRA/TEND]

“We have pretty low prices and I can’t see them falling much further. But supply fundamentals have improved a bit so we’re stuck in a rut,” a European trader said of wheat.

U.S. winter wheat crop conditions improved for a fourth straight week following timely rainfall across the Plains this month, according to a U.S. Department of Agriculture report on Monday.

Rainfall in the Black Sea region has eased drought concerns while a drier spell in western Europe this month has helped farmers catch up on sowing.

Expectations of large volumes in ongoing harvests in Australia and Argentina were also offsetting concerns that availability of Russian and Ukrainian wheat may soon subside.

CBOT soybeans <Sv1> added 0.4% to $9.87-3/4 a bushel and corn <Cv1> inched up 0.1% to $4.28-1/4 a bushel.

Trump said on Monday he would impose a 25% tariff on U.S. imports from Canada and Mexico, as well as a new 10% tariff on imports from China. 

The pledge added to worries about retaliation from trading partners that could hamper U.S. soybean exports to China and corn exports to Mexico.

At the same time, the announcement triggered a rally in Chicago soyoil <BOF5> as it raised the prospect of U.S. biofuel producers switching from Canadian canola oil to domestic soyoil as a feedstock.

Chinese importers have stepped up purchases of U.S. soybeans in anticipation of potential new tariff barriers under the incoming U.S. administration.

U.S. exporters, meanwhile, have shipped soybeans from the busiest U.S. grains port at the fastest rate in nearly four years after rain raised water levels in the Mississippi River, according to government data.

However, regular rain in Brazil and Argentina in recent weeks has boosted prospects for the next corn and soybean harvests in the South American nations that compete with U.S. supplies in export markets.

(Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Sumana Nandy and Ros Russell)