U.S. grains: Wheat hits six-month top as world prices rise

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

Chicago | Reuters — U.S. wheat futures hit a six-month high on Tuesday, supported by a pickup in export business and news that Russia, the world’s top wheat supplier, is considering limiting grain exports through June, traders said.

Soybean futures ended flat and corn drifted lower as brokers awaited Wednesday’s signing of a U.S.-China Phase One trade deal that could reopen China’s giant market to U.S. grain and farm product exports.

Chicago Board of Trade March wheat settled up 6-1/4 cents at $5.68-1/2 per bushel after reaching $5.73, the contract’s highest level since June 28, and the highest for a most-active wheat futures contract since August 2018 (all figures US$).

CBOT March corn ended down 1/2 cent at $3.89 a bushel and March soybeans finished unchanged at $9.42-1/4.

Wheat got a boost from news that Russia’s agriculture ministry may set a non-tariff quota for grain exports of 20 million tonnes in January-June.

The agriculture ministry’s draft, which has yet to be reviewed by the government, sees the quota at 20 million tonnes of grain, which Russia can export without damaging the domestic market, the ministry said.

“It’s the Russian story, where they are talking about export quotas,” Tom Fritz, partner with EFG Group in Chicago, said of Tuesday’s strength in CBOT wheat futures.

Meanwhile, Egypt’s main state wheat buyer purchased 240,000 tonnes of Russian and Romanian wheat in an international purchasing tender. Prices including cost and freight (C+F) ranged from $248.85 to $249.90 per tonne, up about $3 to $4 from an Egyptian wheat tender on Jan. 8.

“It seems like there is a lot of wheat business around right now. The Egyptians continue to pay up,” Fritz said. “World wheat prices are going up, so we have to follow suit.”

Corn and soybean futures languished ahead of Wednesday, when U.S. and Chinese officials are expected to sign a Phase One trade deal. The pact may allow the two sides to start resolving their trade war which led to cuts in exports of U.S. soybeans, corn and other farm products to China.

Reports say China has agreed to vastly increase U.S. food and farm product imports, but the text of the proposed agreement has not been released, leaving markets uncertain.

“Markets are drifting today until we see the actual signing of the Phase One trade deal between the U.S. and China and crucially the actual details of the deal, as we still know almost nothing,” said Matt Ammermann, commodity risk manager with INTL FCStone.

Even if China’s market is reopened to U.S. soybeans, U.S. exporters face tough competition from a huge soybean harvest in Brazil in early 2020 following recent good weather.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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