U.S. grains: Wheat futures edge higher in turnaround from losses

MGEX May 2019 wheat, with 20-day moving average (in orange) and CBOT May 2019 wheat (yellow). (Barchart)

Chicago | Reuters — U.S. wheat futures rose on Wednesday in a rebound from falls to one-month lows a day earlier on the Chicago Board of Trade and contract lows in Kansas City and Minneapolis markets.

Soybean futures set a five-month low, while corn futures also eased.

Tuesday’s wheat price drop attracted bargain buying and short covering on Wednesday, traders said.

Expanding global supplies and competition for export business have already knocked down the most actively traded CBOT wheat contract by 10 per cent so far this year.

“It’s more of a technical rebound than anything,” said Brian Hoops, president of U.S. broker Midwest Market Solutions.

Most-active CBOT July wheat ended up 1-3/4 cents at $4.50-1/4 a bushel, after dropping to its lowest price since March 13 on Tuesday (all figures US$). K.C. and MGEX wheat futures also advanced.

CBOT May corn slipped 3/4 cent to $3.58-1/4 a bushel. May soybeans ended down nine cents at $8.79 a bushel after the contract touched its lowest price since Nov. 1.

The markets were waiting for fresh signs of progress in U.S. trade talks with top global soy buyer China. Shipments of U.S. soybeans to China sank last year after Beijing imposed tariffs on imports from the United States.

The U.S. and China have tentatively scheduled a fresh round of face-to-face trade talks, with negotiators aiming to hold a signing ceremony in late May or early June, according to the Wall Street Journal.

“We have been in this waiting position for months and prices are no longer reacting sharply to speculation about a settlement,” said Matt Ammermann, commodity risk manager with broker INTL FCStone.

Traders are now worried that Chinese soybean demand will suffer further because an epidemic of the fatal hog disease African swine fever in China could cut demand for soymeal feed.

Competition for export demand also looks stiff, traders said, because of large crops in South America.

Argentina estimated its 2018-19 soy harvest at 55.9 million tonnes, up from a drought-reduced 37.78 million tonnes last year.

In Brazil, consultancy Celeres pegged the country’s soybean crop at 115.8 million tonnes, up from its previous estimate of 113.8 million.

“I think beans are fundamentally over-valued,” Hoops said about the U.S. market.

The U.S. Department of Agriculture will provide an update on weekly export sales on Thursday.

Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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