Wheat futures climbed on Friday, with prices ending at their highest in over three weeks, while corn futures eased back from their highest level in almost eight years after a monthly supply and demand report from U.S. Department of Agriculture.
The USDA forecast world wheat supplies at 1,076.5 million metric tons for the 2020/2021 marketing year, down from a previous forecast of 1,777.07 million, according to the World Agricultural Supply and Demand Estimates report released Friday. The government agency, however, also said world wheat production remains at a record 776.5 million metric tons.
Meanwhile, 2020/2021 ending stocks of wheat in the U.S. were forecast at 852 million bushels, compared with the previous projection of 836 million bushels.
On Friday, the most-active May wheat contract
rose 10 cents, or 1.6%, to $6.38 ¾ a bushel in Chicago. Prices finished at their highest since March 17, FactSet data show.
The USDA tightened up the global wheat balance sheet by “a little bit, which is probably flushing the wheat bears out of the markets,” said Sal Gilbertie, president and chief investment officer at Teucrium Trading. “The change wasn’t big enough to get folks too excited, but the wheat charts look short-term oversold and corn prices will keep wheat supported.”
For now, the data are “probably just scaring out the weaker shorts in the wheat markets,” he said.
“That said, no matter how one looks at it, the wheat portion of feed rations around the world will likely increase due to wheat’s current competitiveness with corn,” said Gilbertie, pointing out that the USDA did not emphasize that in the report.
The USDA on Friday also reduced its forecast U.S. corn ending stocks. For the 2020/2021 marketing year, it expects ending stocks of 1.35 million bushels, down from its previous forecast of 1.50 million bushels.
The most-active May corn contract
edged down by 2 ½ cents, or 0.4%, to $5.77 ¼ a bushel. Prices settled Thursday at $5.79 ¾, the highest finish since June 2013.
settled at $14.03 a bushel, down 12 ¼ cents, or 0.9%. The USDA said it’s U.S. ending stocks forecast for soybeans was unchanged at 120 million bushels.
“Soybean ending stocks stayed the same as the USDA reduces the residual to account for higher demand,” said Craig Turner, senior commodities broker at Daniels Trading. “This implies last year’s crop may have been understated.”
Overall, the USDA’s monthly report didn’t offer any major surprises, “which could result in some short term profit taking in grains,” Gilbertie said.
“However, the overall global picture of tightening grain inventories amidst continued growing global demand for grains remains intact,” he said. “Grains will likely be range-bound while the markets monitor the ongoing South American harvest results, spring planting progress in the Northern Hemisphere, and China’s grain purchasing pace.”