Grain futures extended losses after much-watched crop report hiked its estimate for wheat inventories to a clear record, and lifted much-watched forecasts for corn and soy stocks in the US too.
The US Department of Agriculture, in its benchmark Wasde crop report, raised by 6.8m tonnes to 238.9m tonnes its forecast for world wheat inventories at the close of 2015-16.
The upgrade, which took the wheat stocks estimate nearly 20m tonnes above last season's record high, represented in part a lift, of 25m bushels (680,000 tonnes), to the forecast for US inventories of the grain, as the country's performance on exports continues to disappoint.
Shipments from the US, whose competitiveness has been hampered by a stronger dollar, were seen falling to a 44-year low of 775m bushels, a downgrade of 25m bushels.
"US exports are lowered on increased international competition, especially from Canada," which is now expected, for a second successive season, to outperform its southern neighbour in shipments, the USDA said.
However, the main boost to wheat inventory prospects came from China, for which the estimate for stocks at the close of 2015-16 was lifted by 6.3m tonnes to 93.6m tonnes, reflecting weaker domestic demand expectations as Beijing focuses on running down its huge corn stockpiles.Corn 361-0 down 1-2
The USDA flagged Chinese government policies to "reduce the food and feed uses of wheat in favour of other grains".
Mike Zuzolo at Global Commodity Analytics said after the report: "Just what the market didn't need - more global wheat stocks....MORE
Wheat 457-4 down 1-0
Related, at Nikkei:
China's 'zombie commodities' haunt the market
China has a record-breaking stockpile of farm commodities that has been languishing in warehouses for years, declining in value. Officials are afraid to let the crops out, fearing the havoc they could cause if released.
The towering stockpiles result from a numbers-based approach to food security and a declining trend in crop prices that officials were slow to understand. To make this concrete, let's review how China created an unwanted stockpile of rice.
Five years ago, Chinese officials were worried that farmers were producing only one crop of rice a year instead of two. They launched a multi-million-dollar program to subsidize rice seedling suppliers, greenhouses and transplanting machines to make sure rice fields were green from March to November. Local officials got awards for keeping rice production up, and they were admonished for letting fields lie fallow. Most significantly, officials raised the support price for crops planted in early spring....MORE