Wheat Higher as Traders Take Advantage of Subordinated-$5 a Bushel Pricing

By Kirk Maltais

--Wheat for September delivery rose 0.7% to $5.00 a bushel on the Chicago Board of Trade Friday as traders took advantage of sub-$5 per bushel pricing as an opportunity to get a good deal on wheat futures.

--Soybeans for November delivery fell 0.1% to $8.98 3/4 a bushel.

--Corn for December delivery fell 0.2% to $3.38 a bushel.

HIGHLIGHTS

Better Positioned: Wheat futures rebounded for a second day after spending most of the month in decline. Traders see wheat as affordable amidst a 7% decline in prices since the start of October. Wheat futures also saw a lift Friday due to weakness in the U.S. dollar, with the U.S. dollar index on the Intercontinental Exchange trading lower for three consecutive sessions. "Weakness in the U.S. dollar and strength in gold helped to provide some underlying support," said RJO Futures.

Winded: Corn prices have been rallying after a wind storm hit the Midwest, damaging an unknown amount of the 2020 crop. However, that rally came to an end Friday. "There is still going to be an oversupply of corn in the U.S. and the world that is going to make it difficult for corn to rally too much further than yesterday's highs," said Tomm Pfitzenmaier of Summit Commodity Brokerage.

INSIGHTS

On A Roll: The streak of days the USDA has confirmed new flash sales of soybeans to China has extended over a week now, with the agency confirming this morning that China has purchased another 126,000 metric tons of US soybean exports for delivery in the 2020/21 marketing year. That makes it over 1.9 million tons of soybeans that China has purchased through this streak. The buying streak has grains traders thinking positively about soybean's demand prospects, but supply continues to be a concern. "Demand is good, but we have a big crop coming on," said Doug Bergman of RCM Alternatives.

Perception vs. Reality: While grains traders are happy to see a streak of Chinese purchasing of U.S. soybean exports, the timing of the buying is coming ahead of a virtual meeting Saturday between the two nations about the phase one trade deal and its implementation. "Not that I am of a suspicious or cynical nature or anything, there could be additional reasoning behind the recent spurt in Chinese purchasing," said Dan Hueber of the Hueber Report. "There is no question that, to date, they have not kept pace with the level of purchases they need to meet the target of $200 billion above the 2017 levels, but with recent buying spree, it would seem that they could insist they are making a reasonable effort."

End of an Era: The last independent, regional U.S. agricultural futures exchange plans to combine with a bigger exchange group. The Minneapolis Grain Exchange, founded in 1881, says it will merge with electronic stock-options exchange operator Miami International Holdings. The MGEX maintains the benchmark contract for millers and wheat producers to hedge hard red spring wheat prices, the variety used to make cereal and artisanal breads. The Minneapolis-based market held onto its independence for decades while other regional commodity markets in Kansas City, New York and elsewhere were absorbed by mega-exchange companies CME Group and Intercontinental Exchange.

AHEAD:

--The USDA releases its weekly grain export inspections data at 11 a.m. ET Monday.

--The USDA releases its weekly crop progress report for the 2020/21 crop at 4 p.m. ET Monday.

--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.

Jacob Bunge contributed to this article.

Write to Kirk Maltais at [e-mail]