December Chicago wheat was trading 10 1/2 cents higher near 7:30 am CST. Kansas City and Minneapolis wheat were also higher overnight. The November Matif Milling wheat contract is trading 1.25 Euros higher. Wheat markets began the night steady but rose following the European market open. Support was found on news that Russia make take steps to restrict grain exports as soon as this fall. Chinese equity markets were stronger and the support spilled over to the metal and energy markets as traders anticipate additional monetary easing from China after the poor economic data released yesterday. The US Dollar is trading lower which is adding support to the commodity sector this morning.

International news that suggests world importers are becoming more concerned with domestic wheat supplies along with more of a risk on tone for outside markets has bolstered wheat prices to a new 4 day high overnight. A new wave of demand from feed makers in Asia has also added to the supportive tone.

Morocco has been noticeably absent from the international wheat market lately after receiving no bids for 2 consecutive tenders to buy 300,000 tonnes of soft wheat in August. Local importers have been reluctant to trade wheat into the country due to the 17% import duty on wheat along with the staggering increase in world prices. However, this has left the country in a precarious position with domestics stocks set to fall below 1 million tonnes by the end of September. It is expected that Morocco could need as much as 4.3 million tonnes of wheat to fill their supply deficit this year due to a lower than expected harvest of only 2.74 million tonnes. The country is expected to release its first tender without the duty by the first week of October.

In addition, rumors that a ban on Russian grain exports resurfaced overnight after the Russian Economy Minister stated that restrictions could come this fall if domestic grain prices continue to rise. This comes just weeks after the Deputy Prime Minister, who ranks above the Economy Minister, clearly stated they had no plans to restrict exports due to the impact on the global markets. The indecisiveness and uncertainty over the matter is adding to the risk on sentiment this morning. It should be stated that no other government officials have supported the statements made. The Deputy Prime Minster recently stated that officials would meet again in October to discuss their domestic grain supplies so many in the trade will assume a decision will be made at this particular meeting.

The Chicago December wheat vs. December corn spread has widened back out to 140 cents over the December wheat contract. The recent increase in the spread has likely kicked wheat out of any new feed rations in the US. Despite the widening of the spread, Japan announced they plan to buy 1.21 million tonnes of foreign wheat for animal feed which is up from their March plan of just 764,000 tonnes. Japan's usage of corn in feed fell for the 7th straight month to a 20 year low in July. Furthermore, South Korea's largest feed maker has issued a tender to buy up to 70,000 tonnes of feed wheat from any origin for January shipment and a feed miller in the Philippines is looking for 60,000 tonnes of feed wheat due to the recent drop in prices.

 

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