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Wheat Joins Broader Market Selloff Despite Higher US Exports

September 4, 2020 at 16:40 by Andrew Moran

Wheat futures are joining the broader market selloff to end the trading week. Despite positive fundamentals for the crop, most commodities were bleeding red ink amid potential correction. Wheat and other crops were also hampered by a rebounding US dollar.

December wheat futures tumbled $0.0425, or 0.77%, to $5.49 per bushel at 16:25 GMT on Friday on the Chicago Board of Trade (CBoT). Wheat prices will finish the trading week flat, but they have surged more than 10% over the last month. Year-to-date, wheat is still down nearly 2%.

According to the US Department of Agriculture (USDA), Chinese buyers are scooping up American wheat as the nation attempts to ramp up its purchases of US agricultural products. As part of the phase one trade agreement, Beijing booked 250,800 metric tons of US wheat in the week ending August 27. This is the second-largest amount bought in the 2020–2021 marketing season so far.

So far, China has acquired 1.47 million metric tons of US wheat, the biggest amount in five years.

Traditionally Japan and Mexico are the largest importers of US wheat. However, in recent weeks, China, the Philippines, and Nigeria have turned into noteworthy buyers.

Overall, US net export sales of wheat dropped 23.4% to 585,427 metric tons in the week ending August 27. But sales continue to be 4% above the previous-week average, suggesting that demand for US wheat remains strong amid a weaker greenback.

Wheat prices have been finding support on dry weather conditions in Argentina, as well as a forecast suggesting grain markets could face the steepest shortage in years. With ample supplies in the US and Australia, many foreign markets will turn to the two major producers.

Agricultural commodities were also affected by a strengthening greenback. The US Dollar Index, which measures the buck against a basket of currencies, advanced 0.21% to 92.94, from an opening of 92.80. A stronger greenback is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

In other markets, November corn futures jumped $0.0325, or 0.92%, to $3.57 per pound. November soybean futures tacked on $0.0175, or 0.18%, to $9.6775 a bushel. December cocoa futures were unchanged at $2,598 per ton.

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