Wheat Tumbles as Traders Weigh Supply Woes Against Virus Worries
(Bloomberg) -- Wheat futures tumbled in the U.S. as traders weighed a squeeze on global grain supplies against a murky demand outlook.
The French agriculture ministry downgraded its wheat-harvest outlook, and grain quality is also a concern. That adds to lower output expectations in Russia. Drought has slashed spring wheat prospects in North America, and rain has damaged crops in China, while use of wheat in animal feed has surged.
Still, rising crop prices are softening demand in some key buyers. Top wheat importer Egypt booked a lone grain cargo at a tender on Monday, its smallest volume in nearly a year. Turkey canceled one seeking 515,000 tons of feed barley, and Pakistan bought less than half the wheat sought in a tender late last week. At the same time, the relentless global pandemic is raising questions about near-term grain needs.
“Concern about rising Covid-19 cases around the world could limit consumption rates in the coming weeks,” Jacqueline Holland, an analyst at Farm Futures, wrote in a note.
Wheat fell on Wednesday after recent gains. In Chicago, benchmark futures through Tuesday had climbed 11% in the last month through Tuesday, while spring wheat in Minneapolis had gained almost 10% and recently reached the highest in eight years.
“Some consumers are balking at higher prices,” said Tobin Gorey, strategist with Commonwealth Bank of Australia, referring to wheat. “And that balk has a few traders worried that perhaps the gains have been too much, too soon. We’re a little skeptical of that – the market is cutting wheat crop estimates.”
Spring wheat declined as much as 2.3% while hard winter wheat closed the trading day with a decline of 1.9% and benchmark soft winter wheat settled down 1%. Corn and lean hogs fell, while soybeans and live cattle rose.
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