U.S. grains: Wheat futures approach three-month high

CBOT December 2019 wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. wheat futures hit their highest level in nearly three months on Thursday as signs of rising global cash prices prompted a round of short covering, traders said.

Corn and soybean futures also climbed, supported by worries about the size of U.S. crops, while traders continued to monitor prospects for a partial U.S.-China trade deal.

Chicago Board of Trade December soft red winter wheat futures settled up 12-1/4 cents at $5.25-1/2 a bushel after reaching $5.27, the contract’s highest level since July 19 (all figures US$).

CBOT December corn ended up three cents at $3.94-3/4 a bushel and November soybeans finished up 3-1/2 cents at $9.31-1/2 a bushel.

Wheat posted the biggest percentage gains as funds covered short positions amid signs of firming cash prices, as well as dryness reducing crop prospects in Argentina and Australia.

Traders noted that Egypt on Wednesday bought 405,000 tonnes of Russian, French and Ukrainian wheat at prices that were roughly $6-$9 per tonne higher than what it paid at its previous international tender on Oct. 8.

“It could indicate that global wheat prices in general, on the cash side, are a little bit higher,” said Terry Reilly, senior analyst with Futures International.

Reilly also noted market chatter that China might be seeking U.S. wheat.

“Wheat was excluded from all this talk of China buying commodities. Now that wheat is thrown in, some traders are getting excited. That is prompting some technical buying, some short-covering,” Reilly said.

White House economic adviser Larry Kudlow said Thursday that China’s “serious commitment” to buy $40 billion to $50 billion worth of U.S. agricultural goods as part of a so-called Phase 1 trade deal would depend in part on private companies and market conditions.

The deal was unveiled at the White House last week during a visit by China’s vice premier, Liu He, as part of a bid to end a tit-for-tat trade war between Beijing and Washington that has roiled markets and hammered global growth.

CBOT corn and soybean futures climbed after the U.S. Department of Agriculture late Wednesday said it would collect additional information on corn and soybean acreage in Minnesota and North Dakota following recent snowfall, and could publish changes in its Nov. 8 crop production report.

“That news is in general supportive because it increases the potential that the USDA may lower production in the November report,” Reilly said.

Reporting for Reuters by Julie Ingwersen in Chicago; additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore.

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