WHEAT FUTURES (W) -

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575USc +3.37%

Wheat Follows Russian Prices Higher

09/14/2020 | 03:48pm

By Kirk Maltais

 

--Wheat for December delivery rose 0.7% to $5.45 3/4 a bushel on the Chicago Board of Trade Monday, rising as demand for Russian wheat from importers like Turkey grows.

--Soybeans for November delivery rose 0.4% to $9.99 1/2 a bushel.

--Corn for December delivery rose 0.3% to $3.69 1/2 a bushel.

 

HIGHLIGHTS

 

Tracking The Bear: Wheat futures trading on the CBOT led grains higher at the close of the day propelled by higher prices for Russian wheat. "As long as Russian wheat prices continue to rally, Chicago will follow in the same general direction," said Charlie Sernatinger of ED&F Man Capital. For Russian wheat, strong demand from buyers like Turkey pushed prices over $220 per metric ton.

WASDE Carryover: Also moving grain futures on Monday were those WASDE figures. "Overall, the USDA report released on Friday has been bearish in wheat, neutral in corn and bullish in soybean," said AgriTel. Soybean futures traded today over $10 per bushel, the first time they've done so since early 2019. New export sales reported this morning also provided soybeans with a lift, with the USDA confirming 129,000 metric tons of soybeans sold to China, as well as 318,000 tons to unknown destinations.

China Shortfall: Corn futures hit their highest level since mid-March on Monday. Support came from expectations that Chinese weather issues will continue to inflate corn prices on Chinese exchanges. "The market is in a short-term overbought condition but the trend remains up, and the turn up in open interest suggests that fund traders are building a net long position," said RJO Futures. "Traders suspect lower China production and higher usage for future USDA reports."

 

INSIGHTS

 

Temperate Traction: Warmer temperatures are expected in the Midwest this week with only limited rainfall activity, according to agricultural weather firm DTN. This development has grains traders eagerly awaiting today's crop progress report from the USDA, which comes at 4 pm ET. "[The] trade will focus on yield reports this week as they come trickling in from the start of harvest season," said Allendale Inc. Dry weather means that farmers will have less issues getting out into fields to harvest their crops.

Burning Fuel: U.S. ethanol inventories are expected to fall again this week when the EIA releases its weekly report Wednesday, says Futures International. The brokerage forecasts that ethanol inventories will drop by another 75,000 to 150,000 barrels, which would bring the total to 19.8 to 19.9 million barrels - close to a multi-year low found in early August. Meanwhile, ethanol production is expected to rise by 7,000 barrels per day, according to Futures International.

Petition Denied: The U.S. Environmental Protection Agency confirmed today that it wouldn't grant 54 of the 68 "gap" petitions filed by small refineries that would allow them to circumvent renewable fuel standards -- which require ethanol to be mixed into gasoline. The decision was lauded by renewable fuel groups. "The decision to deny these absurd petitions filed by refiners simply to skirt their obligations under the law is the right call," said Kurt Kovarik, the National Biodiesel Board's VP of Federal Affairs.

 

AHEAD:

 

--General Mills releases its earnings for fiscal first quarter Wednesday.

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

--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.

 

--Write to Kirk Maltais at kirk.maltais@wsj.com

 

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