By Kirk Maltais
--Wheat for September delivery rose 4.6% to $5.50 3/4 a bushel on the Chicago Board of Trade Wednesday, in reaction to projections of a smaller European harvest in 2020 as well as hopes of further Chinese purchasing of U.S. exports.
--Soybeans for November delivery rose 0.6% to $8.82 3/4 a bushel.
--Corn for December delivery rose 0.1% to $3.34 a bushel.
Less to Go Around: Wheat futures trading on the CBOT Wednesday finished at their highest levels since mid-April. "There's a whole grouping of news right now driving things in the short-term," said Rich Nelson of Allendale Inc. Speculation of a stronger-than-expected La Nina this year, as well as a 6% drop in projections for the German wheat harvest by agricultural consulting firm AgriTel are the main factors driving traders today, according to Nelson. "The continued breakdown in the competition is driving trade," he said.
New Fund Attention: The rise of wheat futures on the CBOT was also in reaction to rumors China is buying more U.S. wheat exports. "Rumors abound that China may have secured 2 cargoes of US SRW wheat which has pushed Chi wheat into buy stops with spot futures at their best levels since March," said AgResource. Wheat futures are at their highest level in nearly 3 months, with managed money funds buying roughly 9,400 wheat contracts today, according to AgResource.
All Wet: Scattered showers in the Midwest this week pressured corn futures Wednesday. "Corn remains on the defensive from ideal US weather," said Terry Reilly of Futures International. With weather supportive for crop growth, corn supply is expected to stay ample this year. Scattered showers are expected to continue through the rest of the week, according to a forecast from agricultural research firm DTN.
Thickening Tension: President Trump's signing of sanctions against China to punish it for actions against Hong Kong is fueling tensions between the two nations. Combined with recent comments by the President casting doubt on a phase two trade agreement, the strained mood is keeping grain traders on edge. The one saving grace was the USDA's announcement this morning that China has purchased 389,000 metric tons of U.S. soybeans and 132,000 tons of corn for 2020/21 delivery--which is assuaging some concerns, at least temporarily.
Piles of Corn: Grain traders surveyed by The Wall Street Journal are expecting this week's export sales report from the USDA to show as much as 3 million metric tons of corn sold on the export market for the week ending July 9. If sales do hit the higher end of trader forecasts, that could be close to a 200% uptick from last week's sales of just over 1 million tons--and could provide wind for the sails of corn traders hoping for China to purchase more U.S. corn exports. Higher sales are also expected for soybean exports, as much as 1.85 million tons--which would be roughly 39% higher than last week's sales.
Burning Out: Acreage of industrial hemp planted by U.S. farmers this year is expected to be less than last year, thanks mostly to a 2019 growing season that overpromised and under-delivered for farmers hoping to get in on a crop with better money-making potential than standard row crops. State regulators expect "a significant walk back," on 2020 acreage and harvesting, according to cannabis price-reporting agency Hemp Benchmarks, due mostly to lower demand for CBD products amid a lack of clarity from the FDA about the usage of CBD in consumer products. The coronavirus pandemic is also a factor keeping a lid on demand, according to the price-reporting agency.
--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.
--Rail transportation provider Kansas City Southern reports its second-quarter earnings before the market opens on Friday.
--The CFTC releases its weekly commitment of traders report at 3:30 p.m. ET Friday.
Write to Kirk Maltais at firstname.lastname@example.org