Wheat Futures Climb to Two-Week High on Chinese Buying

By: Deyana Ivanova
Deyana Ivanova
Deyana has a media background as a Journalism graduate. With a general interest in the financial markets and global… read more.
on Apr 8, 2013

Wheat futures climbed more than one percent on April 8, reaching their highest level in almost two weeks as massive Chinese buying and concerns about the US crop underpinned the market.

By 02:36 GMT on April 8, wheat for May delivery on the Chicago Board of Trade (CBOT) rose 1.1 percent to $7.07 a bushel — the highest since March 28 — on volume almost double the 100-day average for that time. Prices, which had lost 30 percent since hitting an intraday high of $9.47 a bushel on July 23, started advancing last week, boosted by a risk of more damage to the winter crop in the Northern hemisphere and fears that cold soil temperatures threaten to delay spring planting (Wheat Prices Keep Rising as Cold Weather Fuels Supply Concerns).

**China Buys Large Amount of US Wheat**
Growing worries about supply are not the only reason for the rise in wheat prices. China, the world’s largest consumer of the grain, has underpinned the wheat market, buying almost one million metric tonnes from the US, state-owned researcher China National Grain and Oils Information Center said in a report on April 8. The Beijing-based organisation revealed that China bought 14 to 16 cargoes of US wheat on April 4 in what is the country’s first large purchase of soft red winter wheat so far this year. Panamax-sized vessels that carry wheat typically take cargoes weighing about 60,000 tonnes. The shipments are for delivery from June to December from the Gulf of Mexico. According to the report, China’s wheat imports may reach a “relatively high level” in the 2013-2014 marketing year, after reaching a projected three million tonnes in the current year.

Wheat harvest in China, also the world’s top producer of the grain, was damaged last year by disease, particularly in the Jiangsu and Anhui provinces, which produce similar type of wheat used to make cake flour. The lower production and record high domestic prices have spurred imports over the past several months. China’s 2012 imports, which consisted largely of feed-grade wheat, were the highest in eight years. The last purchase of the grain was made in February, when China bought 350,000 tonnes of US wheat, traders said.

Asked why China had bought this huge amount of wheat from the US in its latest purchase, Michael Pitts, a commodity sales director at National Australia Bank Ltd., said: “It’s more opportunistic to a large extent.” Bloomberg quoted him as saying: “Soft wheat has relatively more attractive prices compared with domestic availability.”
!m[ China Buys Up To 16 Cargoes of US Wheat ](/uploads/story/1821/thumbs/pic1_inline.png)

According to China National Grain and Oils Information Center, the country bought the wheat at $325-$330 per tonne CIF (Cost, Insurance and Freight), which was about 200 yuan ($32.25) per tonne cheaper than domestic prices after import tariff, said the researcher.
**Among other soft commodities, as of 04:08 GMT on April 8, CBOT corn for May delivery was up 0.79 percent to $6.34 a bushel, while soybeans gained 0.86 percent to $13.73 a bushel.**

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