|18 February, 2020

Wheat hits 1-week high as Australian output falls to lowest since 2008

The most-active wheat contract on the Chicago Board of Trade gained 1.5% at $5.51 a bushel

A view shows ears of wheat in a field outside the Siberian city of Krasnoyarsk, Russia July 29, 2019. Image used for illustrative purpose.

A view shows ears of wheat in a field outside the Siberian city of Krasnoyarsk, Russia July 29, 2019. Image used for illustrative purpose.

REUTERS/Ilya Naymushin

SINGAPORE  - Chicago wheat futures climbed more than 1% on Tuesday to a one-week high after Australia said output fell to a 12-year low, raising concerns over world supplies.

Soybeans slid for a second session on concerns over Chinese demand as large parts of the country remained under lockdown to contain a coronavirus outbreak.

"Australia output number is bit supporting for prices although the country's drought situation has been known for a while," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

"The government's number still too high, we think production is around 14.5 million tonnes."

Australia said on Tuesday its 2019/2020 wheat harvest missed its forecast as a severe drought across the east coast wilted crops. 

The Australian Bureau of Agricultural and Resource Economics and Sciences said production totalled 15.17 million tonnes — the lowest since 2008.

As Australia suffers from lower output, Ukraine's grain exports are up 24.5% to 38.4 million tonnes so far in the 2019/20 July-June season, the Ministry for Development of Economy, Trade and Agriculture said on Monday. 

The most-active wheat contract on the Chicago Board of Trade gained 1.5% at $5.51 a bushel by 0359 GMT, after climbing to its highest since Feb 10 at $5.58 a bushel. Wheat closed down 0.3% on Friday.

Markets were closed on Monday for a U.S. public holiday.

Soybeans Sv1 were unchanged at $8.93-3/4 a bushel, having closed down 0.3% on Friday and corn was up 0.3 at $3.78-3/4 a bushel, having closed down 0.5% in the previous session.

China, by far the world's biggest soybean importer, is expected to reduce imports as the coronavirus cuts demand.

The rapidly-spreading virus claimed another 98 lives in mainland China, bringing the total death toll there to 1,868, the National Health Commission said. There were 1,886 new confirmed infections for a total of 72,436. 

Rising world supplies of the oilseed are likely to provide further headwinds to the market.

Brazilian soybean production in the 2019/2020 cycle is expected to reach a record 125.6 million tonnes, agribusiness consultancy AgRural said on Monday, as more than a fifth of the planted area has now been harvested. 

Brazilian truck drivers began protesting early on Monday at Latin America's largest port in Santos, affecting the unloading of shipments and arrival of trucks at the port, the union representing some of the protesters said. 

(Reporting by Naveen Thukral; editing by Uttaresh.V) ((naveen.thukral@thomsonreuters.com; +65-6870-3829; Reuters Messaging: naveen.thukral.thomsonreuters.com@reuters.net))

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