Traders eye Brazilian bean harvest, speculators bearish on CBOT wheat provider FX678

Chicago wheat futures fell further on Monday from last week’s four-month high, as speculators held on to bearish positions despite strong wheat demand from China reaching its strongest level in years.

Soybeans regained ground last week after the U.S. government’s higher-than-expected estimate of Brazilian production eased supply concerns. Corn futures also rose.

“China’s wheat imports continue to increase, exceeding last year’s record level of nearly 10 million tons by 1.5 million tons in November,” Commerzbank analysts said, adding that wheat futures should keep rising.

As of 19:40 Beijing time, the main wheat contract Wv1 of the Chicago Board of Trade (CBOT) fell 1.23% to 624 cents per bushel. The contract hit 649.5 cents per bushel last Wednesday, the highest since August 9. level.

The sale of up to 1.12 million tons of U.S. soft red wheat to China last week triggered short covering that sent prices up 15% for eight consecutive sessions.

CBOT wheat is still up about 11.5% from the opening price on November 28.

However, traders said that even after abandoning many bearish bets, speculators and funds still held the largest net short position in history.

Also on Friday, the U.S. Department of Agriculture lowered its 2023/24 wheat ending stocks forecast to 659 million bushels and global wheat ending stocks forecasts to 258.2 million tons in its monthly report. Both forecasts were lower than analysts’ expectations.

At the same time, the Ukrainian Ministry of Agriculture raised its 2023 grain harvest forecast to a record high, with wheat production at 22.2 million tons, barley production at 5.8 million tons, and corn production at 30.1 million tons.

In terms of other crops, the CBOT soybean continuous contract rose 0.33% to 1,308.3 cents per bushel, and the corn continuous contract fell 0.31% to 484 cents per bushel.

The U.S. Department of Agriculture lowered its forecast for Brazil’s soybean production in the next season by 2 million tons to 161 million tons, which is higher than analysts’ expectations and still a record high.

Grain traders are eyeing Brazil’s harvest, the world’s largest soybean supplier, while U.S. stockpiles are tight.

For corn, the USDA forecast Brazil’s production at 129 million tons, the same as its November forecast and higher than analysts’ expectations.

The National Bureau of Statistics of China announced on the 11th that China’s total grain output in 2023 will be 1,390.82 billion catties, an increase of 17.76 billion catties or 1.3% over the previous year, and has stabilized at more than 1.3 trillion catties for nine consecutive years.