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Wheat Higher as Global Supply Looks to Fall

04/09/2021 | 03:10pm EDT

By Kirk Maltais

--Wheat for May delivery rose 1.6% to $6.38 3/4 a bushel, on the Chicago Board of Trade Friday, maintaining an uptick in prices after the WASDE report showed tighter world supplies for wheat.

--Corn for May delivery fell 0.4% to $5.77 1/4 a bushel.

--Soybeans for May delivery fell 0.9% to $14.03 a bushel.


Shrinking the Pile: Wheat futures on the CBOT found support following the release of the monthly WASDE by the USDA. In its report, the USDA cut world wheat ending stocks by 5.7 million metric tons, to 295.5 million tons. "The 2020/21 global wheat outlook is for slightly smaller supplies, increased consumption, higher exports and reduced stocks this month," said the USDA in the report. World production is also projected to drop, with the USDA cutting it by 300,000 tons to 776.5 million tons.

No Surprises: U.S. corn inventories were forecast lower by the USDA in its latest WASDE report released this afternoon--estimating ending stocks at 1.35 billion bushels, down from a projection of 1.5 billion bushels last month. The cut was roughly what was anticipated by analysts surveyed by The Wall Street Journal, which caused any momentum on grains futures to grind to a halt by midday. "The report was fairly neutral in the corn," said Charlie Sernatinger of ED&F Man Capital.

Balance Sheet: Soybean futures fell after the USDA's release of the WASDE report, with grains traders reacting to the USDA not changing its outlook to U.S. soybean ending inventories at 120 million bushels. "Soybean ending stocks stayed the same as the USDA reduces the residual to account for higher demand," said Craig Turner of Daniels Trading. "This implies last year's crop may have been understated." Meanwhile, Brazilian soybean production is seen as being higher than expected by analysts.


Changing Tides: What also provided wheat support on Friday was a simple shift in trader's attitudes towards futures prices, something that may last heading into trading next week. "Wheat is looking like it got cheap enough with the market oversold," said Doug Bergman of RCM Alternatives. "Producers can re-own sales as the market is still extremely cheap to corn/beans." Wheat futures have risen 3.9% in the past three trading sessions, after dropping 7.8% though March.

Rocky Roads: Friday's WASDE report from the USDA didn't make much in the way of major changes to supply-demand projections, but it may have opened the door for volatility in grains futures in the coming days. "Expect immense volatility as a result of this report in the corn market especially," said Mike Zuzolo of Global Commodity Analytics. "I am dubious of this much feed demand around the world currently, especially since USDA took soybean crush down but exports up."


--The USDA will release its weekly export inspections report at 11 a.m. ET Monday.

--The USDA will release its weekly crop progress report at 4 p.m. ET Monday.

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

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

(END) Dow Jones Newswires

04-09-21 1509ET

Stocks mentioned in the article
ChangeLast1st jan.
CBOT ETHANOL FUTURE (EH) - CBR (FLOOR)/C1 0.83% 1.09 End-of-day quote.-20.73%
CORN FUTURES (C) - CBR (FLOOR)/C1 -0.26% 757.5 End-of-day quote.56.92%
DJ INDUSTRIAL -1.99% 33587.66 Delayed Quote.13.51%
SOYBEAN MEAL FUTURES (ZM) - CBE (ELECTRONIC)/C1 0.31% 450.9 End-of-day quote.3.48%
SOYBEAN OIL FUTURES (ZL) - CBE (ELECTRONIC)/C1 2.39% 68.66 End-of-day quote.58.46%
WHEAT FUTURES (W) - CBR (FLOOR)/C1 -0.66% 754.75 End-of-day quote.17.84%
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