|30 March, 2020

Wheat gains on global food supply concerns; soybeans up 1%

The most-active wheat contract on the Chicago Board Of Trade added 0.7% to $5.75-1/2 a bushel

Image used for illustrative purpose. A combine harvester gathers wheat in fields at the start of harvesting on August 9, 2010 in Chebsey near Stafford, United Kingdom.

Image used for illustrative purpose. A combine harvester gathers wheat in fields at the start of harvesting on August 9, 2010 in Chebsey near Stafford, United Kingdom.

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SINGAPORE- Chicago wheat futures rose for a second session on Monday after a proposal by the world's top wheat supplier Russia to limit grain exports added to concerns about supply tensions arising from the coronavirus crisis.

Soybean futures also extended gains as the risk of logistical snags in South American soybean belts and reduced palm oil production in Malaysia due to coronavirus restrictions also fuelled supply fears.

Corn was little changed as the market consolidated after recent losses linked to the slump in demand for corn-based ethanol fuel.

Russia's economy ministry said on Monday it supported an agriculture ministry proposal to limit grain exports to 7 million tonnes from April through June, making the plan more likely to be adopted.

While the proposal would have only limited immediate impact, as it is in line with market forecasts of Russian shipments, the move has raised expectations that tougher steps could follow, traders said.

"Though it is still only a proposal at the moment, it is already generating uncertainty," Commerzbank analysts said in a note.

The Russian export quota plan came after wheat markets had already rallied in the past two weeks, as panic buying of food staples by households reacting to the coronavirus epidemic fuelled milling demand and spurred speculative buying. 

"The 'textbook' case is that demand for food will not change much but there is some switching from the pricier 'luxury' foods to cheaper 'standard' foods," said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

Oilseed markets were also facing potential supply disruption, which was offsetting the prospect of reduced demand for edible oil, as restaurants shutter in much of the world, and for biodiesel as fuel markets tumble.

Chinese soybean processors fear that the spread of the coronavirus in exporting countries could lead to further supply tensions as China resumes industrial activity after its coronavirus crisis.

The most-active wheat contract on the Chicago Board Of Trade (CBOT) Wv1 was up 1.3% to $5.78-3/4 a bushel by 1139 GMT, as it held near a two-month high of $5.87 hit on Friday.

CBOT soybeans were up 0.7% at $8.87-3/4 a bushel while corn Cv1 inched down 0.2% to $3.45-1/4 a bushel.

Corn, widely used to make ethanol in the United States, has been dented this month by the rout in crude oil, which on Monday sank to its lowest since 2002.

But Monday's hesitant trend in corn reflected caution ahead of U.S. Department of Agriculture planting and stocks reports on Tuesday. 

(Reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore, Editing by Sherry Jacob-Phillips and Jane Merriman) ((gus.trompiz@thomsonreuters.com; +33 1 49 49 52 18; Reuters Messaging: gus.trompiz.thomsonreuters.com@reuters.net))

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