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July 11, 2013 6:45 pm
Wheat prices rallied as the latest US monthly report on supply and demand forecast Chinese imports of the commodities rising to the highest since the 1990s.
CBOT wheat rose 2.4 per cent to $6.88 a bushel as the US Department of Agriculture said China’s imports for the 2013-14 crop year were expected to total 8.5m tonnes, the highest since 1995-96.
The news comes as rainstorms in China have sent traders there on a global wheat-buying spree. Exporters have booked unusually large wheat purchases by Chinese buyers over the past few weeks.
The increased forecast for Chinese demand comes as inventories at the end of the 2013-14 year are forecast to total 576m bushels, the lowest since 2007-08. The USDA also increased overall global wheat consumption estimates for the current year on higher Chinese demand. Demand forecasts were also raised for India, Pakistan, Iran, and Japan.
The USDA report also confirmed the dual nature of the grain market, with dwindling inventories because of last year’s devastating drought contrasting sharply with the expected bumper crop this year.
CBOT July corn rose 2.5 per cent to $7.27 a bushel as the USDA said inventories before the new harvest would decline to 729m bushels, down from 769m forecast earlier, and 989m last year. The lack of “old crop” stocks is likely to lead to the temporary closure of processing plants over the next few weeks.
Corn inventories at the end of the next crop year are expected to total 1.959bn bushels, up from 1.949bn forecast earlier. Output will total a record 13.95bn. Exports are forecast at 1.25bn, down from 1.3bn forecast last month. Corn for December delivery rose 0.4 per cent to $5.23 a bushel.
However, soyabean prices fell as the USDA boosted its expectations for US production. US soyabean production would hit a record 3.42bn bushels, the USDA predicted, up 13 per cent from last year.
The forecast meant that stocks of soyabeans at the end of this season would rise to 295m bushels, above expectations of traders polled by Reuters.
Richard Feltes, grains analyst at RJ O’Brien, a brokerage, said that traders would be “reluctant to embrace” the USDA’s projections for soyabean supply, believing that it was overstating acreage and yields.
Prices of CBOT soyabeans for November delivery – after the new crop is harvested – initially lurched lower, though later were trading up 0.3 per cent at $12.89 a bushel.
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