U.S. grains: Wheat touches 3-year high on global supply concerns

Chicago | Reuters – U.S. wheat futures surged to three-year highs on Thursday on concerns about tightening global supplies and reduced shipments from key suppliers, but the market closed well below the peaks as major exporter Ukraine denied it would ban exports.

The gains in wheat spilled over to the corn market, which also benefited from strong demand for the yellow grain.

But soybean futures weakened amid escalations in the tariff fight with China.

Chicago Board of Trade wheat futures have risen for four days in a row, rallying as farmers in Europe wrap up their harvests and crop-watchers lower their production outlook for key suppliers.

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There was talk of Ukraine limiting its exports due to crop woes but the country’s agriculture ministry denied it was planning such a move.

“It is not getting better, it is getting worse as they finish off the crop,” said Mark Schultz, chief analyst at Minnesota-based Northstar Commodity Investment Co.

CBOT September soft red winter wheat futures ended up 2-1/4 cents at $5.60-1/2 a bushel after earlier touching a peak of $5.93, the highest for a front-month contract since July 2, 2015.

Early gains spurred a round of short-covering. There also were concerns about disappointing yields in spring wheat growing areas of the United States and drought in Australia limiting production there.

“Technically, it looks good and fundamentally it looks like there is an opportunity for it to go higher,” Schultz added.

CBOT November soybean futures were off 4-1/4 cents at $8.82-1/2 a bushel. Soybeans found support at the contract’s 10-day moving average.

China on Thursday urged the United States to “calm down” and return to reason after the Trump administration sought to ratchet up pressure for trade concessions by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.

“Any hope for quick resolution of the U.S.-China trade war was quickly squashed once again yesterday afternoon,” Matt Zeller, director of market information at INTL FCStone, said in a note to clients.

The U.S. Agriculture Department on Thursday morning reported weekly export sales of soybeans at 637,000 tonnes, near the low end of forecasts for 450,000 tonnes to 1.2 million tonnes.

CBOT September corn futures gained 1-3/4 cents to $3.66-3/4 a bushel, closing higher for the sixth time in seven sessions.

Corn export sales came in at 1.278 million tonnes, near the high end of forecasts for 700,000 tonnes to 1.4 million tonnes. (Additionaly reporting by Karl Plume in Chicago, Colin Packham in Sydney and Sybille de La Hamaide in Paris;

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