U.S. grains: Wheat hits one-week top after USDA report

CBOT September 2019 wheat with Bollinger (20,2) bands, a gauge of market volatility. (Barchart)

Chicago | Reuters — U.S. wheat futures climbed to their highest in more than a week after the U.S. Department of Agriculture (USDA) lowered its forecast of global wheat production in a monthly supply and demand report on Thursday.

Corn and soybeans followed the firm trend in wheat.

Chicago Board of Trade September wheat settled up 16-3/4 cents at $5.21-1/2 a bushel after reaching $5.23, its highest since July 1 (all figures US$).

CBOT September corn ended up 9-1/4 cents, or 1.8 per cent, at $4.44-1/4 a bushel and August soybeans rose 4-1/2 cents to settle at $8.99 a bushel.

Wheat led the way up after USDA in its July supply/demand report lowered its forecast of 2019-20 wheat production in Russia, the European Union, Australia and Canada.

“USDA basically slashed the global wheat production,” said Terry Reilly, senior analyst with Futures International, adding, “The trade was caught off-guard because they were so focused on corn and soybeans.”

Reflecting the production cuts, USDA lowered its forecast of 2019-20 global wheat ending stocks to 286.46 million tonnes, down from 294.34 million in June and near the low end of a range of analyst expectations.

USDA also trimmed its forecast of U.S. 2019-20 wheat ending stocks to one billion bushels, lower than most analysts expected, although its estimate of U.S. all-wheat production was 1.921 billion bushels, above an average of trade expectations.

“We still have to have a high enough quality (U.S.) crop to compete in the export market, and there are a lot of questions as to whether that quality is there,” said Brian Hoops, president of Midwest Market Solutions.

The U.S. winter wheat harvest was 47 per cent complete as of July 7.

For corn, USDA raised its production forecast to 13.875 billion bushels, based on its larger-than-expected June 28 planted acreage estimate of 91.7 million acres.

The government left its estimate of the U.S. corn yield unchanged at 166 bushels per acre, while most analysts in a Reuters survey expected a slight reduction.

Following widespread planting delays this spring, traders await the USDA’s Aug. 12 report in which the government expects to release updated U.S. plantings figures for corn, soybeans and several other crops.

“(USDA) did not touch corn yield. I think some people are disappointed by that,” said Ted Seifried, chief ag market strategist with Zaner Group. “They’re punting until next month because that’s when we’ll have an update on acreage,” Seifried said.

For soybeans, USDA lowered its U.S. 2019-20 soybean production estimate to 3.845 billion bushels, down from 4.15 billion in June. USDA cut its soybean yield estimate to 48.5 bushels per acre, from 49.5 in June.

Reporting for Reuters by Barbara Smith in Chicago; additional reporting by Colin Packham in Sydney.



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