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Wheat Tops One-Week High of $5 Despite Global Supply Glut

Summary:
Wheat futures are trading at their best levels in a week as the agricultural commodity topped . Despite the industry facing a global supply glut, wheat prices are rising higher on an increase in net-long positions and a boost in buying across international markets. But the consensus is that this rally will be short-lived due to immense stockpiles. July wheat futures picked up %excerpt%.05, or 1.00%, to .0375 per bushel at 15:22 GMT on Wednesday on the Chicago Board of Trade (CBoT). Wheat has risen to a one-week high, but it remains down 10% year-to-date. Japan’s Ministry of Agriculture announced on Wednesday that it is purchasing 110,573 tons of food-quality wheat from the US, Canada, and Australia as the world’s sixth-largest importer attempts to boost domestic stockpiles. Wheat is

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Wheat futures are trading at their best levels in a week as the agricultural commodity topped $5. Despite the industry facing a global supply glut, wheat prices are rising higher on an increase in net-long positions and a boost in buying across international markets. But the consensus is that this rally will be short-lived due to immense stockpiles.

July wheat futures picked up $0.05, or 1.00%, to $5.0375 per bushel at 15:22 GMT on Wednesday on the Chicago Board of Trade (CBoT). Wheat has risen to a one-week high, but it remains down 10% year-to-date.

Japan’s Ministry of Agriculture announced on Wednesday that it is purchasing 110,573 tons of food-quality wheat from the US, Canada, and Australia as the world’s sixth-largest importer attempts to boost domestic stockpiles. Wheat is the second-most important staple after rice, and Tokyo buys most of the grain for milling through tenders that are issued three times per month.

The front-month contract may also be rising on the growing number of major markets reopening their economies. Although panic-buying had been paramount during the early stages of the coronavirus pandemic, analysts say normalcy would be better for wheat prices in the long-term.

But the long-term prospects for wheat remain bleak because the world faces a supply glut.

Eastern European countries, such as Russia, Romania, and Ukraine, are lifting their export caps next month. Canadian farmers are anticipated to plant more wheat and a range of other agricultural commodities in the coming months. The US Department of Agriculture (USDA) reported on Tuesday that 60% of the spring wheat crop was planted, which matched market expectations. It also confirmed that more than half of the farmers’ winter wheat crop was in good to excellent condition, beating median estimates.

Overall, large harvests have been anticipated for many wheat-producing nations, a trend that will inevitably add to global wheat inventories, which are already projected to hit an all-time high in the 2019–2020 marketing season and surge to a record high in the 2020–2021 year.

The USDA forecast in its latest outlook that Argentina, Australia, Canada, and Russia would record larger crops in 20202–2021. The US would match forecasts, while Europe would harvest a smaller crop.

That said, commodity funds and money managers increased their net-long positions in wheat and corn contracts, while selling their soybean contracts.

In other agricultural commodities, July corn futures tumbled $0.03, or 0.88%, to $3.185 per pound. July soybean futures added $0.05, or 0.6%, to $8.4775 a bushel. July coffee futures slipped $0.0085, or 0.79%, to $1.062 per pound.

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Andrew Moran
I am a full-time professional writer. Prior to my self-employment, I worked as a reporter for Digital Journal covering the politics beat and The Toronto Times reporting on the city’s entertainment scene. I currently write mostly about business, marketing and finance

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