U.S. grains: Wheat climbs on global demand for bread

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

Chicago | Reuters — U.S. wheat futures surged on Wednesday, with the May contract on the Chicago Board of Trade hitting a two-month high on a mix of technical buying and global demand for bread as the coronavirus prompts consumer stockpiling, analysts said.

Corn futures closed modestly higher while soybean futures turned lower.

CBOT May wheat settled up 18-1/2 cents at $5.80 per bushel after earlier reaching $5.83-1/4, the contract’s highest since Jan. 22 (all figures US$) .

CBOT May corn ended up 1-1/4 cents at $3.48-1/2 a bushel while May soybeans fell 5-1/4 cents to finish at $8.81-1/2 a bushel.

Wheat charged, with the spot May contract gaining sharply against back months on spreads.

“The clearing of retail bread off the shelves was really helping the wheat market jump initially, but adding to that is a little bit of a food security issue and a little bit of an expansion of the wheat pipeline,” said Terry Roggensack, analyst with the Hightower Report in Chicago.

The wheat rally also reflects tight supplies of U.S. soft red winter wheat, the crop that underlies the CBOT contract, at a time when global traders are seeking to buy wheat futures in the most liquid market.

“Demand for wheat futures is greater than the demand for the wheat itself,” said Austin Damiani, an independent trader. “Order flow from financial players coming in to buy (CBOT wheat) futures as a proxy for world wheat is creating dislocations between the various contract months,” Damiani said.

Corn found support from fresh export demand. The U.S. Department of Agriculture said private exporters sold 138,000 tonnes of U.S. corn to unknown destinations.

“The rumours of China buying, and the unknown sale actually seen this morning, are going to keep (futures) relatively firm heading into the stocks and acreage reports,” said Mike Zuzulo of Global Commodity Analytics, referring to reports due from USDA on March 31.

Soybean futures turned lower, retreating from early gains. But worries about potential disruptions of supplies from South America due to coronavirus measures underpinned the market.

“The concern is if a major port like Santos in Brazil or Rosario in Argentina shuts down completely. Then you could see demand move en masse towards the U.S. for soymeal and soyoil,” said Michael Magdovitz, commodity analyst with Rabobank.

Soybean deliveries to crushing plants have been severely cut in Argentina, the world’s top supplier of soymeal livestock feed, as the country reacts to the coronavirus pandemic, the local grains export industry chamber said on Tuesday.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Christopher Walljasper in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore.

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