Wheat Futures Higher on Tighter World Supplies
July 15 2020 - 3:58PM
Dow Jones News
By Kirk Maltais
--Wheat for September delivery rose 4.6% to $5.50 3/4 a bushel
on the Chicago Board of Trade Wednesday, in reaction to projections
of a smaller European harvest in 2020 as well as hopes of further
Chinese purchasing of U.S. exports.
--Soybeans for November delivery rose 0.6% to $8.82 3/4 a
bushel.
--Corn for December delivery rose 0.1% to $3.34 a bushel.
HIGHLIGHTS
Less to Go Around: Wheat futures trading on the CBOT Wednesday
finished at their highest levels since mid-April. "There's a whole
grouping of news right now driving things in the short-term," said
Rich Nelson of Allendale Inc. Speculation of a
stronger-than-expected La Nina this year, as well as a 6% drop in
projections for the German wheat harvest by agricultural consulting
firm AgriTel are the main factors driving traders today, according
to Nelson. "The continued breakdown in the competition is driving
trade," he said.
New Fund Attention: The rise of wheat futures on the CBOT was
also in reaction to rumors China is buying more U.S. wheat exports.
"Rumors abound that China may have secured 2 cargoes of US SRW
wheat which has pushed Chi wheat into buy stops with spot futures
at their best levels since March," said AgResource. Wheat futures
are at their highest level in nearly 3 months, with managed money
funds buying roughly 9,400 wheat contracts today, according to
AgResource.
All Wet: Scattered showers in the Midwest this week pressured
corn futures Wednesday. "Corn remains on the defensive from ideal
US weather," said Terry Reilly of Futures International. With
weather supportive for crop growth, corn supply is expected to stay
ample this year. Scattered showers are expected to continue through
the rest of the week, according to a forecast from agricultural
research firm DTN.
INSIGHT
Thickening Tension: President Trump's signing of sanctions
against China to punish it for actions against Hong Kong is fueling
tensions between the two nations. Combined with recent comments by
the President casting doubt on a phase two trade agreement, the
strained mood is keeping grain traders on edge. The one saving
grace was the USDA's announcement this morning that China has
purchased 389,000 metric tons of U.S. soybeans and 132,000 tons of
corn for 2020/21 delivery--which is assuaging some concerns, at
least temporarily.
Piles of Corn: Grain traders surveyed by The Wall Street Journal
are expecting this week's export sales report from the USDA to show
as much as 3 million metric tons of corn sold on the export market
for the week ending July 9. If sales do hit the higher end of
trader forecasts, that could be close to a 200% uptick from last
week's sales of just over 1 million tons--and could provide wind
for the sails of corn traders hoping for China to purchase more
U.S. corn exports. Higher sales are also expected for soybean
exports, as much as 1.85 million tons--which would be roughly 39%
higher than last week's sales.
Burning Out: Acreage of industrial hemp planted by U.S. farmers
this year is expected to be less than last year, thanks mostly to a
2019 growing season that overpromised and under-delivered for
farmers hoping to get in on a crop with better money-making
potential than standard row crops. State regulators expect "a
significant walk back," on 2020 acreage and harvesting, according
to cannabis price-reporting agency Hemp Benchmarks, due mostly to
lower demand for CBD products amid a lack of clarity from the FDA
about the usage of CBD in consumer products. The coronavirus
pandemic is also a factor keeping a lid on demand, according to the
price-reporting agency.
AHEAD
--The USDA will release its latest weekly export sales numbers
at 8:30 a.m. ET Thursday.
--Rail transportation provider Kansas City Southern reports its
second-quarter earnings before the market opens on Friday.
--The CFTC releases its weekly commitment of traders report at
3:30 p.m. ET Friday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
July 15, 2020 15:43 ET (19:43 GMT)
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