Wheat Futures Drop on Hefty Canadian Crop Outlook
04 December 2020 - 9:13PM
Dow Jones News
By Kirk Maltais
--Wheat for March delivery fell 1.5% to $5.75 1/2 a bushel, on
the Chicago Board of Trade on Friday in response to a new report
that Canadian wheat production is expected to hit a seven-year
high.
--Corn for March delivery fell 1.4% to $4.20 1/2 a bushel.
--Soybeans for January delivery fell 0.5% to $11.63 a
bushel.
HIGHLIGHTS
O Canada: New data from Statcan projected Canadian wheat
production at 35.2 million metric tons, the highest in seven years.
Indications of ample supplies of the grain globally are placing
pressure on wheat futures. "With U.S. wheat areas expected to catch
moisture over the next week, the wheat market is breaking down and
starting a lower trend," said Doug Bergman of RCM Alternatives.
Oil Well: Soy oil futures trading on the CBOT helped provide
support for soybean futures. U.S. soy oil closed up 1.8% at $38.41
a pound, following Asian palm oil futures jumping to new contract
highs on tightening supply. The Malaysian contract closed at
roughly 3,437 Malaysian ringgit per metric ton and may have more
upside left, according to grains traders.
INSIGHT
China Avoids U.S. Grains: New export sales of U.S. corn to
Mexico were reported by the USDA on Friday, with 182,020 metric
tons sold. News of the sale didn't galvanize futures buying on the
CBOT, as grains traders had anticipated the USDA might confirm new
purchases by China of corn and soybeans. "Traders are disappointed
China is staying away from the US market as the USD trends lower,"
said Terry Reilly of Futures International.
More Upside: Even with corn futures down Friday, grains traders
see potential gains ahead as U.S. corn remains competitive on the
global export market, said RJO Futures. "China corn prices are
trading near $10 per bushel and the spread between U.S. and China
corn prices are historically wide," the firm said. "U.S. corn is
priced well below Brazil, Argentina and Ukraine." A resumption of
dryness in South America and Chinese purchasing of U.S. exports may
drive corn higher in the short term, RJO Futures said.
Dry Eyes: Crop-growing regions of Argentina and southern Brazil
are expected to remain dry in the next 30 days, even if more
rainfall does hit these areas, said Arlan Suderman of StoneX.
Rainfall is expected to be anywhere from 2 inches to 4 inches off
of seasonal norms, which will continue to hurt crops grown there,
particularly soybeans. "A short crop in Brazil increases demand for
U.S. soybeans, while a short crop in Argentina increases demand for
product over the coming year," Mr. Suderman said.
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.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
December 04, 2020 15:58 ET (20:58 GMT)
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