Wheat Higher as Traders Take Advantage of Subordinated-$5 a Bushel Pricing
August 14 2020 - 4:20PM
Dow Jones News
By Kirk Maltais
--Wheat for September delivery rose 0.7% to $5.00 a bushel on
the Chicago Board of Trade Friday as traders took advantage of
sub-$5 per bushel pricing as an opportunity to get a good deal on
wheat futures.
--Soybeans for November delivery fell 0.1% to $8.98 3/4 a
bushel.
--Corn for December delivery fell 0.2% to $3.38 a bushel.
HIGHLIGHTS
Better Positioned: Wheat futures rebounded for a second day
after spending most of the month in decline. Traders see wheat as
affordable amidst a 7% decline in prices since the start of
October. Wheat futures also saw a lift Friday due to weakness in
the U.S. dollar, with the U.S. dollar index on the Intercontinental
Exchange trading lower for three consecutive sessions. "Weakness in
the U.S. dollar and strength in gold helped to provide some
underlying support," said RJO Futures.
Winded: Corn prices have been rallying after a wind storm hit
the Midwest, damaging an unknown amount of the 2020 crop. However,
that rally came to an end Friday. "There is still going to be an
oversupply of corn in the U.S. and the world that is going to make
it difficult for corn to rally too much further than yesterday's
highs," said Tomm Pfitzenmaier of Summit Commodity Brokerage.
INSIGHTS
On A Roll: The streak of days the USDA has confirmed new flash
sales of soybeans to China has extended over a week now, with the
agency confirming this morning that China has purchased another
126,000 metric tons of US soybean exports for delivery in the
2020/21 marketing year. That makes it over 1.9 million tons of
soybeans that China has purchased through this streak. The buying
streak has grains traders thinking positively about soybean's
demand prospects, but supply continues to be a concern. "Demand is
good, but we have a big crop coming on," said Doug Bergman of RCM
Alternatives.
Perception vs. Reality: While grains traders are happy to see a
streak of Chinese purchasing of U.S. soybean exports, the timing of
the buying is coming ahead of a virtual meeting Saturday between
the two nations about the phase one trade deal and its
implementation. "Not that I am of a suspicious or cynical nature or
anything, there could be additional reasoning behind the recent
spurt in Chinese purchasing," said Dan Hueber of the Hueber Report.
"There is no question that, to date, they have not kept pace with
the level of purchases they need to meet the target of $200 billion
above the 2017 levels, but with recent buying spree, it would seem
that they could insist they are making a reasonable effort."
End of an Era: The last independent, regional U.S. agricultural
futures exchange plans to combine with a bigger exchange group. The
Minneapolis Grain Exchange, founded in 1881, says it will merge
with electronic stock-options exchange operator Miami International
Holdings. The MGEX maintains the benchmark contract for millers and
wheat producers to hedge hard red spring wheat prices, the variety
used to make cereal and artisanal breads. The Minneapolis-based
market held onto its independence for decades while other regional
commodity markets in Kansas City, New York and elsewhere were
absorbed by mega-exchange companies CME Group and Intercontinental
Exchange.
AHEAD:
--The USDA releases its weekly grain export inspections data at
11 a.m. ET Monday.
--The USDA releases its weekly crop progress report for the
2020/21 crop at 4 p.m. ET Monday.
--The EIA releases its weekly update on ethanol production and
inventories at 10:30 a.m. ET Wednesday.
Jacob Bunge contributed to this article.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
August 14, 2020 16:05 ET (20:05 GMT)
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