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US Wheat Futures Experience Significant Upswing Due to Private Sales to China
US Wheat Futures Experience Significant Upswing Due to Private Sales to China

US Wheat Futures Experience Significant Upswing Due to Private Sales to China

  • 05-Dec-2023 3:53 PM
  • Journalist: Gabreilla Figueroa

On Monday, Chicago Board of Trade (CBOT) wheat experienced a notable uptick of nearly 3%, with the most-active contract (Wv1) reaching its highest level since late August. This surge was attributed to the U.S. Department of Agriculture's confirmation of the largest single private sale to China in years.

The CBOT March wheat (WH24) settled up 17-3/4 cents at $6.20-1/2 per bushel, reaching $6.26-1/2 at its peak. This closing value marked the highest since October 20, while the continuous chart of the most-active contract (Wv1) displayed the highest point since August 28.

The catalyst behind the surge was the U.S. Department of Agriculture's confirmation of private sales amounting to 440,000 metric tons of U.S. wheat to China. This transaction stands out as China's most substantial purchase of U.S. wheat since at least 2020. The significance of China opting for U.S. wheat over sources from the Black Sea suggests a potential stabilization in prices, according to Mike Zuzolo, President of Global Commodity Analytics.

In contrast, CBOT January soybeans (SF24) concluded the day down 18-3/4 cents or 1.4% at $13.06-1/4 per bushel, marking the lowest level since October 31. Analysts closely monitored weather conditions in Brazil, a major soy supplier, where rain forecasts offered some relief in drought-stricken regions, alleviating concerns about potential crop losses.

Actively traded March corn (CH24) settled marginally higher at $4.85-1/2 a bushel, up by 3/4 cent, and remained within Friday's trading range. Corn found support from the weekly export inspections report released by the U.S. Department of Agriculture. The report indicated that over 1.2 million metric tons of the yellow grain underwent inspection for export in the latest week, surpassing trade expectations that ranged from 350,000 to 900,000 tons.

The dynamics in the wheat market reflect a complex interplay of factors. The confirmation of significant private sales to China serves as a major driver, signaling increased demand from a key player in the global market. The decision by China to opt for U.S. soft red wheat over alternatives from the Black Sea suggests a shift in market dynamics and potentially more stable pricing.

On the other hand, soybean prices faced downward pressure, reaching a one-month low. The decline is attributed to a combination of factors, including the ongoing scrutiny of weather conditions in Brazil, a crucial soybean-producing region. The forecasted rain in drought-affected areas of Brazil has somewhat alleviated concerns about crop losses, contributing to the downward pressure on soybean prices.

Corn, meanwhile, maintained a relatively stable position, with a slight increase in value. The support for corn prices came from the USDA's weekly export inspections report, which revealed a substantial volume of corn inspected for export, surpassing market expectations. This positive development contributes to the overall stability of corn prices in the market.

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