Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Wheat Dips As Global Supplies Under Spotlight

May 12, 2020 at 16:39 by Andrew Moran

Wheat futures are slipping on Tuesday as global supplies come into focus. Since peaking at $5.80 at the end of March, the agricultural commodity has been steadily falling and could test $5 by the summer. Investors’ eyes will be on the closely watched US government report that is anticipated to forecast ample supplies of corn, soybeans, and wheat.

July wheat futures tumbled $0.0425, or 0.82%, to $5.13 per bushel at 16:04 GMT on Tuesday on the Chicago Board of Trade (CBoT). Wheat prices have slumped 7.5% over the last month, adding to their year-to-date declines of just under 9%.

Although analysts say that weather has largely been taken out of American and European wheat market prices in recent sessions, there is still some consternation regarding cold temperatures in the US and rainfall in Europe. For instance, the US Department of Agriculture (USDA) recently reported a slight drop in US winter wheat crop conditions, from 55% to 53%.

That said, USDA researchers noted that there should not be too much of a concern about planting progress and crop conditions in the US.

Meanwhile, Egypt acquired 2.1 million tons of local wheat over the last month, a 30% increase from the same time a year ago. The world’s biggest wheat buyer has increased domestic stockpiles and pushed up prices for local farmers. At the same time, industry observers are warning that this could apply some risk to international inventories.

With many major wheat producers imposing restrictions on exports, such as Russia, Ukraine, and Kazakhstan, President Abdel-Fattah El-Sisi has been encouraging farmers to just sell to the government.

Yes, we’re well organized, and we have good reserves, but with the uncertainty until December, I say it would be better if you only store at home what’s necessary. Sell it to the government to keep it for the benefit of everyone.

Canada is forecast to see its wheat output rise 2% in the upcoming 2020–2021 marketing season, the USDA says. Production is estimated to come in at 33.8 million tons, up from 32.3 million tons in the 2019–2020 season. Officials say that the Canadian market faces three primary challenges: weather, transportation, and market access amid the coronavirus pandemic.

In other agricultural markets, June corn futures were flat at $3.19 per pound. June soybean futures shed $0.0175, or 0.2%, to $8.5325 a bushel. July coffee futures plummeted $0.0315, or 2.84%, to $1.076 per pound.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply