Wheat stays higher
July 13, 2013
US wheat futures rose for a fourth day on Thursday, as investors covered short positions after the US Department of Agriculture lowered its forecasts of US and global wheat stockpiles below trade expectations. Corn and soyabean futures followed wheat higher, with benchmark November soyabeans also posting a fourth straight gain.
At the Chicago Board of Trade, wheat for September delivery settled up 4 cents at $6.83 per bushel, paring gains toward the close after reaching a two-week high of $6.93. New-crop December corn ended up 5-1/2 cents at $5.27 a bushel and new-crop November soyabeans were up 6 cents at $12.90-3/4 a bushel.
Wheat advanced after the USDA released monthly data during the trading session. In its July supply/demand report, the government lowered its forecast of 2013/14 US wheat ending stocks to 576 million bushels from its forecast of 659 million in June and below the average analyst estimate of 632 million. The government cited expectations for increased export demand, especially from China.
“The new-crop wheat carry-out number should be seen as pretty bullish,” said Joe Vaclavik, president of Standard Grain in Chicago. “At 576 (million bushels), I don’t think anybody was looking for a number that low. Exports are up, so there is your culprit,” Vaclavik said. The USDA also slashed its forecast of global wheat ending stocks for 2013/14 to 172.38 million tonnes, from 181.25 million in June. If realised, the figure would be the smallest since 2008/09. China, the world’s top wheat grower, is expected to import the highest volume of the grain in a decade in 2013/2014 after its domestic harvest was damaged by bad weather, according to a forecast by China National Grain and Oils Information Centre, an official think tank.
China bought more than 1.3 million tonnes of US wheat in early July in a flurry of deals after US prices fell to near the lowest levels in a year. Wheat and other grains also drew support from a sharp drop in the dollar, after comments from Federal Reserve Chairman Ben Bernanke indicated the US central bank may not wind down its economic stimulus program as soon as previously expected.
The US dollar index was on track for a two-day decline of more than 2.2 percent, its biggest since 2009. A weaker dollar makes dollar-denominated commodities like grains cheaper to overseas buyers. As well, funds hold a net short position in CBOT wheat and corn, leaving those markets vulnerable to bouts of short-covering. Courtesy Reuters