May 20, 2013
Wheat soars on hopes of export demand shifting to US
Chicago wheat futures soared more than 2 percent on Thursday amid expectations that world's No. 4 exporter Russia could soon run out of supplies, forcing some demand to shift to the United States, the top shipper of the grain.
The expectations stemmed from a large purchase of wheat from the Black Sea region, including Russian, by Egypt's main state-run wheat buyer, the General Authority for Supply Commodities, better known in trade circles by its acronym GASC.
While the purchase of 475,000 tonnes of wheat from Russia, Romania and Ukraine at an international tender highlighted how high prices had made US supplies uncompetitive, it also raised the question if Egypt, the world's top wheat importer, was trying to grab as much Russian wheat as possible before any move by Moscow to limit sales -- as persistently speculated.
Russia has repeatedly denied that it would ban exports -- like it did in 2010 after a historic drought and sparking a major rally in prices -- due to a poor crop this year.
December wheat futures at the Chicago Board of Trade ended 2.8 percent higher at $8.9 1- 3/4, with the market adding to earlier gains after the GASC tender results were announced.
Paris wheat futures ended up 0.6 percent at 261.5 euros per tonne. CBOT November soybeans ended 1/2 cent lower at $17.4 7 per bushel, while December corn rose 1 percent to $7.98-1/2.
Soybean futures fell for a second consecutive session on expectations that recent rainfall had helped to recoup some losses from the worst drought in half a century, but the market pared the losses near the close on bargain buying.
There were some expectations for the USDA to raise its estimate of the soybean yield in its next update of the crop in its supply-demand report on Sept. 12 due to rains in recent weeks in the northern and eastern Midwest helping the crop.
Soybean futures were also weighed by a sharp drop in prices in the cash markets before the Midwest harvest gets underway and on expectations that farmers will step up sales.
Closely-followed trade house INTL FC Stone on Wednesday pegged the 2012 US soybean crop at 2.739 billion bushels, above the US government's forecast for 2.692 billion. However, the firm pegged corn output at 10.607 billion bushels, below the government forecast for 10.779 billion.
Corn futures were higher on forecasts for low US corn output this year following the summer long drought and relentless heat that slashed corn yield prospects.
A large sale of US corn totalling over 200,00 tonnes to an unknown destination as reported by the US Department of Agriculture also helped support prices. Export demand had been dented by price rising to record highs this summer.