CBOT wheat futures rise on reports of China buying US wheat

New Delhi — Wheat futures on the Chicago Board of Trade firmed Thursday on reports of China buying wheat from the US for the first time since 2017 and ongoing concerns over shipping and border/port logistics due to the coronavirus pandemic.

China may have bought at least two cargoes of Hard Red Winter wheat earlier in the week, according to market sources.

"It is largely state buyers from China taking advantage of cheap freight and cheap prices," INTL FCStone chief commodities analyst Arlan Suderman said.

The most-active CBOT Soft Red Winter wheat contract rose 4.2% day on day to $5.40/bushel Thursday. The benchmark SRW wheat contract was remained largely steady during the overnight session to stand at $5.37/bu at 12:11 am CT Friday.

The Kansas City May Hard Red Winter wheat contract rose 3.7% day on day to $4.76/bu Thursday. The HRW contract retreated slightly in the overnight session to stand at $4.68/bu at 12:16 am CT Friday.

Markets also rallied after reports of US millers buying wheat to increase flour production amid expectations of fresh demand emerging from US consumers.

The US No. 2 HRW wheat export price has fallen 9.4% since February 19 to stand at $211/mt Monday, according to the International Grains Council. The US No. 2 Soft Red Winter wheat export price fell 11.7% over the same period to $227/mt.

"Over the past several months, the export price for all classes of wheat out of the Gulf and Pacific Northwest has fallen due to substantial pressure in the US wheat futures markets, pressure that the pandemic [coronavirus] has only increased," US Wheat Associates said in a report.

CBOT SRW wheat futures have fallen 12% to $5.06/bu in mid-March from $5.74/bu in late January, while Kansas City Board of Trade HRW wheat futures fell 11% from $4.86/bu to $4.32/bu over the same period, according to the report.

Under the Phase 1 trade deal signed between China and the US in January, China agreed to purchase $40 billion-$50 billion/year of US agricultural goods. The deal included new and more specific rules for China to import wheat under its tariff rate quota of 9.64 million mt, which it has not adhered to so far.