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U.S. grains: Wheat jumps to one-month top

Soy climbs, corn little changed

cbot may wheat
CBOT May 2020 wheat with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. wheat futures surged nearly four per cent on Monday and hit a one-month high, buoyed by strong buying by domestic flour millers as consumers stockpile bread, and signs of a pick-up in global export business, traders said.

Soybeans rose on expectations of rising demand for soymeal, a feed ingredient. Corn followed the firm trend but rallies were capped by poor margins for producers of corn-based ethanol fuel.

Chicago Board of Trade May wheat settled up 23-1/4 cents at $5.62-1/2 after reaching $5.63-1/4, its highest since Feb. 21 (all figures US$).

CBOT May soybeans ended up 21-1/2 cents at $8.84 a bushel and May corn finished down 1/4 cent at $3.43-1/2 a bushel.

Wheat led the way up, reflecting milling demand as the spread of the COVID-19 coronavirus has led to U.S. consumer stockpiling of staples such as bread and pasta.

“A lot of it has to do with the virus. Bread is flying off the shelves. There is some concern; Will the flour mills be able to continue, due to virus concerns?” said Tom Fritz, a partner with Chicago-based EFG Group.

Fresh export demand lent support. Chinese importers last week signed deals to buy 340,000 tonnes of U.S. hard red winter wheat, their first purchase of the grain since late 2017.

And Russian wheat export prices stabilized last week after seven weeks of decline.

“Late last week, there was a global push to originate wheat,” Fritz said.

The plunge in crude oil futures this month has depressed margins for the ethanol sector, which is projected to use nearly 40 per cent of the 2019 U.S. corn crop. That factor has hung over the CBOT corn market, dragging futures to contract lows last week, although values closed little changed on Monday.

Expectations that ethanol plants will scale back production, curbing supplies of distillers’ dried grains (DDGs), a byproduct used in livestock feed, have lifted prices for soymeal, a competing feed ingredient.

U.S. ethanol producer POET said it suspended corn buying “at a number of locations” due to weak biofuel demand and is evaluating its production levels.

The strength in soymeal futures continued to lift CBOT soybeans on Monday, with CBOT May soybeans reaching $8.85-1/4 a bushel, the contract’s highest since March 6.

“The slowdown in the ethanol grind, there’s not as many DDGs being made. That creates a greater demand for soybean meal,” Fritz said.

The spread of COVID-19 in South America has also stoked worries about shipments of soy. Argentina is the world’s top soymeal supplier and Brazil is the biggest global soybean exporter.

— Reporting for Reuters by Julie Ingwersen in Chicago; additional reporting by Christopher Walljasper in Chicago, Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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