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U.S. grains: Wheat firm on technical bounce, tightening global supplies

Soy firm, corn flat ahead of monthly USDA reports

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. wheat futures rose more than three per cent on Monday on a mix of technical buying after last week’s seven-week low and fundamental support from tightening supplies in Australia and Russia, analysts said.

Soybean futures also advanced while corn futures were little changed ahead of key monthly crop reports due Wednesday from the U.S. Department of Agriculture.

Chicago Board of Trade December wheat futures settled up 17 cents at $5.28-1/4 per bushel (all figures US$). November soybeans ended up 1-1/4 cents at $8.45-1/4 a bushel and December corn rose 1/4 cent at $3.67-1/4 a bushel.

CBOT wheat bounced after a four-session slide last week pressed the December contract to $5.07-1/2, its lowest since July 19.

“After wheat made pretty good lows last week, some (of Monday’s support) is a technical rebound,” said Terry Reilly, analyst with Futures International in Chicago.

Additional strength stemmed from news that the Australian Bureau of Agriculture, Resource Economics and Rural Sciences (ABARES) lowered its forecast for the country’s 2018-19 wheat crop to 19.1 million tonnes, from 21.9 million in June. The figure is below USDA’s latest Australian wheat forecast of 19.5 million tonnes.

Meanwhile, dry conditions in Russia’s southwestern Volga Valley could threaten the germination of the 2019-20 winter wheat crop, Radiant Solutions said in a daily note.

“Timely rains are needed,” Reilly said.

News of a barley purchase by Saudi Arabia, which booked 1.5 million tonnes in a tender, may suggest that the importer expects rising prices and tightening grain supplies, traders said.

Russia’s deputy prime minister in charge of agriculture said the Russian 2018-19 grain crop would allow exports of 30 million tonnes, a figure some traders have cited as a potential ceiling after which export curbs could be imposed.

However, U.S. wheat exports have been moderate so far.

“U.S. wheat exports are still struggling. We are not seeing higher demand for U.S. wheat,” said Phin Ziebell, an agribusiness economist with National Australia Bank.

CBOT soybean futures firmed despite softening cash values at the U.S. Gulf and expectations that USDA will raise its estimate of the U.S. crop in a monthly report due Wednesday.

Some analysts cited a jump in soybean futures on China’s Dalian Commodity Exchange after cold weather in the country’s northeast raised concerns about damage to crops.

China imported 9.15 million tonnes of soybeans in August, up 14 per cent from July, customs data showed on Saturday.

CBOT corn futures were little changed and the December contract stayed inside of Friday’s trading range as the market awaited updated yield and production estimates from USDA on Wednesday.

After the CBOT close, USDA said it delayed the release of its weekly U.S. Crop Progress report until Tuesday from Monday afternoon due to technical issues.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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