U.S. grains: Wheat retreats from two-month peak

Corn rallies to end firm

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

Chicago | Reuters — U.S. wheat futures fell on Thursday, retreating from a two-month high set the previous session, as traders booked profits and awaited developments in the coronavirus crisis that had sparked the recent run-up in wheat markets.

Soybean futures also declined but corn rallied late in the session to eke out a modest gain as Wall Street equity markets surged.

Chicago Board of Trade May wheat futures settled down 11 cents at $5.69 per bushel. CBOT May soybeans ended down 1-1/4 cents at $8.80-1/4 a bushel while May corn finished up 1/4 cent at $3.48-3/4 a bushel.

Wheat set back a day after the May contract jumped three per cent as panic buying of food staples by consumers spurred flour demand as well as speculative buying on futures markets.

“It’s been a pretty good rally in a short period of time for both wheat and soybeans, and you’re just going to run out of people willing to buy it at these levels,” said Mark Schultz, analyst with Northstar Commodity.

Uncertainty fanned by reports of export restrictions, notably in top global supplier Russia, had also supported prices.

“The market’s worries about supply from Russia and other places remain vivid,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

However, Russia’s agriculture ministry said on Thursday it expected domestic grain prices to stabilize in the near future and did not foresee any drop in the country’s supply of flour.

CBOT corn firmed despite continued pressure from the ethanol sector. U.S. ethanol plants are slowing production as falling energy prices have depressed profit margins, slashing demand for corn, the primary feedstock for the biofuel.

“When you start running the math on ethanol plants going offline, you know we’re going to be hurting on demand,” said Chuck Shelby, analyst with Indiana-based Risk Management Commodities.

Robust weekly export data lent support. The U.S. Department of Agriculture (USDA) reported export sales of U.S. old-crop corn in the week to March 19 at 1.8 million tonnes, a marketing year high. But traders said the tally, which included a big sale to China, was largely factored into the market.

Soybeans pared losses as soybean meal futures closed higher, supported by ideas that a slowdown in ethanol production will curb supplies of distillers dried grains (DDGs), a byproduct that competes with soybean meal as a feed ingredient.

Traders were also looking ahead to USDA’s March 31 U.S. acreage and stocks reports.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Christopher Walljasper in Chicago, Gus Trompiz in Paris and Colin Packham in Sydney.

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