Wheat falls as Russia seen keeping export taxes unchanged

In Commodity News 02/02/2016

Chicago wheat lost ground on Monday, taking its declines to three out of four sessions, with the market weighed down by expectations that top supplier Russia will leave taxes on grain exports unchanged. Corn and soybeans eased, giving up some of the previous session’s gains which were driven by month-end bargain buying.

Russia, one of the world’s largest wheat exporters, is not expected to change its current regime of taxes on grain exports, sources said on Friday, following proposals to change them. Concerns over the possibility of tougher limits on Russia’s foreign sales of wheat had sent global prices to a one-month high last week.

“Looks like Russia is not going to raise the export tax and that is one of the drivers adding to pressure on prices today,” said Phin Ziebell, agribusiness economist at the National Australia Bank. “It was bargain buying at the end of the month but the market hasn’t been able to hold on to those gains. The longer term story is that the world remains very well supplied,” Ziebell said. Chicago Board of Trade most-active wheat wheat fell 0.9 percent to $4.74-3/4 a bushel, having closed up 1.5 percent on Friday. Soybeans eased 0.3 percent to $8.79-1/4 a bushel and corn dropped 0.7 percent to $3.69-1/4 a bushel.

There was additional pressure on wheat stemming from Egypt’s rejection of a French wheat shipment. Egypt said it did not meet strict new import rules, rattling traders who said the move could drive up the cost of supplying the world’s largest buyer and endanger its ability to provide its poorest citizens bread. Large speculators trimmed their net short position in Chicago Board of Trade corn futures in the week to Jan. 26, regulatory data released on Friday showed. The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that noncommercial traders, a category that includes hedge funds, trimmed their net short position in CBOT wheat and increased their net short position in soybeans.

The U.S. Department of Agriculture (USDA) reported weekly export sales of old-crop U.S. corn at 817,000 tonnes, at the low end of trade estimates for 800,000 to 1 million tonnes.

The USDA said on Thursday exporters cancelled sales of 395,000 tonnes of U.S. soybeans to China, a factor that traders were still digesting.

Prices at 0258 GMT

  Contract        Last    Change  Pct chg  Two-day chg MA 30   RSI 
  CBOT wheat     474.75    -4.50  -0.94%    +0.53%     473.53   46
  CBOT corn      369.25    -2.75  -0.74%    +1.03%     363.42   55
  CBOT soy       879.25    -3.00  -0.34%    +1.33%     873.91   48
  CBOT rice      $11.34   -$0.01  -0.13%    +0.22%     $11.35   63
  WTI crude      $33.19   -$0.43  -1.28%    -0.09%     $33.38   59
  Currencies                                                
  Euro/dlr       $1.085   $0.001  +0.11%    -0.83%
  USD/AUD         0.707   -0.002  -0.23%    -0.25%

Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential

Source: Reuters (Reporting by Naveen Thukral; Editing by Muralikumar Anantharaman)