CHICAGO, Dec 23 (Reuters) – U.S. wheat futures fell on Wednesday, touching a three-week low during the session as grain markets came under renewed pressure from large global supplies and lackluster export demand.
Egypt, the world’s top wheat importer, bought 120,000 tonnes of Argentine wheat in a tender that highlighted the intense competition U.S. sellers face on the world market.
The deal came after Argentina’s new president said he would eliminate wheat and corn export taxes as part of his plan to revitalize the country’s farm sector. “We saw some very steep competition out there,” Rich Nelson, chief strategist for brokerage Allendale in Illinois, said about the Egyptian wheat tender.
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There were no offers in Egypt’s tender for U.S. wheat, which is considered too expensive to compete, traders said. Louis Dreyfus offered to sell Argentine wheat for as cheap as $174.88 a tonne, traders said.
The cheapest price for non-Argentine wheat came from Lecureur, which offered French wheat of $187.42 a tonne, they said. At the Chicago Board of Trade, nearby March wheat was down 0.3 percent at $4.70-1/2 a bushel by 11:20 a.m. CST (1720 GMT).
The market traded as low as $4.69-3/4 a bushel, the lowest price for a front-month contract since Dec. 9.
Wheat in U.S. Plains states, including Kansas and Texas, in the coming days should benefit from snow that will protect crops from cold temperatures, traders said.
Wheat planted in the fall goes dormant during the winter before resuming growth in the spring. Globally, wheat production is expected to reach a record high, according to the U.S. Department of Agriculture, which this month raised its estimate for Argentina’s 2015/16 wheat exports because of government policy changes.
The corn market also “continues to be plagued by competition for export sales,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
March corn lost 0.3 percent to $3.65-1/4 a bushel after trading to $3.64-1/2, its weakest level since Dec. 17.
Corn slid 1.6 percent on Monday. March soybeans slumped 0.3 percent to $8.82-3/4 a bushel. The prospect of increased sales by Argentine farmers after the country’s currency devaluation and export tax cuts weighed on prices, traders said.
