U.S. grains: Robust global demand supports Chicago wheat

CBOT March 2020 wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — Profit-taking pulled down Chicago Board of Trade wheat futures on Wednesday after robust global demand and concerns about tightening supplies pushed the most-active contract to its highest price since August 2018.

Soybean futures also ended lower, while nearby corn futures inched higher.

Traders in the farm markets continued to wait for signs of increased demand from China after Beijing pledged to increase imports of U.S. agricultural products in an initial trade deal the countries signed last week. The agreement is meant to reduce tensions after nearly two years of a tit-for-tat tariff war.

The United States has not confirmed new agricultural sales to China since inking the deal.

Still, an “ongoing brisk pace of global wheat business” lifted CBOT wheat futures early in the trading session, said Rich Feltes, head of market insights for U.S. broker RJ O’Brien.

French transportation strikes, a drought-hit harvest in Australia and rising offers for wheat in Russia also lent support to U.S. prices, traders said.

“It’s just fueled this fire in wheat,” said Karl Setzer, commodity risk analyst for AgriVisor.

Most actively traded wheat closed 0.7 per cent lower at $5.77-3/4 a bushel at the CBOT (all figures US$ except where noted). It earlier rose to $5.92-1/2, the highest price for a most-active contract since Aug. 2, 2018.

March wheat on Paris-based Euronext earlier rose to 199.75 euros (C$289.60) a tonne, also the highest level since August 2018.

Rail and port strikes in France have raised the risk of reduced export availability in the European Union’s biggest wheat supplier. A French grain industry body said this week that industrial action over pension reform had left 450,000 tonnes of grain, worth some 100 million euros (C$145 million), blocked at French ports.

In Russia, the world’s top wheat exporter, a proposal to cap grain exports further focused markets on tightening supplies at a time of brisk demand.

“For wheat, there have been some striking headlines,” said Carlos Mera, senior commodities analyst at Rabobank. “It’s a combination of things — Australia, world stocks going down, good demand, possible Russian export restrictions.”

Soybean futures touched a one-month low, reflecting doubts over the scale of potential Chinese purchases following the U.S.-China trade deal. Traders are also keeping a close eye on rival supplier Brazil, which is expected to harvest a massive crop.

CBOT soybeans ended down 0.2 per cent at $9.13-3/4 a bushel, after dropping earlier to $9.13-1/4, the lowest price for a most-active contract since Dec. 16. Corn rose 0.4 per cent to $3.88-3/4 a bushel and the most-active contract reached its highest price since Jan. 3.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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