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GRAINS-Wheat falls on technical trade but on track for annual rise

Julie Ingwersen

* Wheat set for best annual gain since 2012 on supply drop

* Soybean market buffeted by U.S.-China tussle in 2018

* Corn also up this year; tight wheat supply spurs demand

(Recasts; updates prices, adds quotes, changes byline, dateline; previous PARIS/KUALA LUMPUR) CHICAGO, Dec 31 (Reuters) - U.S. wheat futures fell more than 1 percent on Monday in technically driven trade, brokers said, but were still on track for a yearly gain of nearly 18 percent. U.S. soybean futures turned lower, retreating from early advances tied to signs of thawing trade tension between Washington and top global soy buyer China. Corn futures followed soybeans down in subdued trade ahead of Tuesday's New Year's Day holiday. As of 12:40 p.m. CST (1840 GMT), Chicago Board of Trade March wheat futures were down 8 cents at $5.03-1/2 per bushel after touching $5.03, the contract's lowest since Jan. 24, and the lowest for a most-active wheat contract since Nov. 16. CBOT March soybeans were down 3-1/4 cents at $8.92-1/4 a bushel. March corn was down 1 cent at $3.74-1/2 a bushel. Fundamental news was lacking, allowing brokers and commodity funds to focus on squaring positions on the last trading day of the month, quarter and year. "Today is a holiday trade environment, meaning it is all sputters, all risk-off for the year-end. The funds are balancing right now, and selling corn and wheat, and a little soybeans," said Don Roose, president of Iowa-based U.S. Commodities. Despite Monday's slip, CBOT wheat was poised to end 2018 up about 18 percent, its biggest annual rise since 2012, after a sharp fall in production in major exporters Russia, the European Union and Australia, making the grain one of the biggest gainers in commodity markets this year. Corn has also risen this year as tightening wheat supply fueled additional demand from livestock feed makers, offsetting concerns about disruption to U.S. shipments to China.

CBOT soybeans, however, were on track for a 7 percent yearly decline after a plunge in exports to China, coupled with big harvests in the United States and Brazil, weighed on prices. A resumption in Chinese imports of U.S. soybeans this month as part of a negotiated truce between the world's two largest economies has helped Chicago prices rebound from a decade low recorded in September. CBOT soybean futures firmed on Monday in early moves after what U.S. President Donald Trump over the weekend described as a "very good call" with China's President Xi Jinping. However, traders remain cautious about the scale of Chinese buying, and a partial shutdown of the U.S. government has added to uncertainty by suspending daily and weekly export sales reports from the U.S. Department of Agriculture.

CBOT soy futures retreated as U.S. cash markets showed few signs of fresh sales, prompting traders to shift their focus to ample world supplies. "The problem with soybeans is you're playing a global shell game. Whether were shipping soybeans to China, or South America is shipping beans, it doesnt change the global demand structure, and the trade knows that," said Jim Gerlach of A/C Trading.

CBOT prices at 12:40 p.m. CST (1840 GMT):

Net Pct Volume

Last change change

CBOT wheat WH9 503.50 -8.00 -1.6 27542CBOT corn CH9 374.25 -1.25 -0.3 53130CBOT soybeans SH9 892.00 -3.50 -0.4 46854CBOT soymeal SMF9 307.40 -1.50 -0.5 3718CBOT soyoil BOF9 27.63 0.11 0.4 7424

NOTE: CBOT March wheat and corn and January soybeans shown in cents per bushel, January soymeal in dollars per short ton and January soyoil in cents per lb.

(Additional reporting by P.J. Huffstutter in Chicago, Gus Trompiz in Paris and Emily Chow in Kuala Lumpur; editing by Christian Schmollinger, David Evans and Dan Grebler)