Headlines:
- Need for quality pushes Brazilian demand for US wheat
- Grain futures break new multi-month highs
Wheat futures extended the gains of the previous session, pushing into fresh multi-month highs. Wheat prices surged on Thursday, on US government supply and demand data, which showed a trim to world balance sheets, with lower Indian and Kazakh production, and swift US exports. “US and world carryout remains heavy but the report triggered a futures rally and we expect the large speculators and funds to cover some short positions,” noted CHS at the beginning of the session. And so it proved. True, prices trimmed gains a little early on, but buying soon returned. March Chicago wheat futures, were breaking fresh seven-and-a-half month highs in afternoon deals. Futures were up 1.4% on the day, at $4.49 ½ a bushel.
- Agco doubles down on South American equipment market
Tractor maker Agco is attempting to takeover Kepler Weber, a Brazilian manufacturer of grain storage and handling equipment, doubling down on what it sees as the world’s most buoyant equipment market. Agco, the maker of Massey Ferguson and Fendt machinery, struck a binding agreement with the two largest shareholders of Kepler Weber, to purchase 35% of the outstanding shares.Agco will offer R$22.00 for all outstanding shares of Kepler Weber, with the intention of delisting the company, which its bid values at R$578.9m Kepler Weber shares rose 15.1% to R$20.15 in morning deals in Sao Paulo.
Summary:
At the close today March Corn was cup 4.25, Wheat was up 4.00 and Beans added 7.50 cents. Heavy wetness in Brazil was responsible for interruptions in the Brazilian Soybean harvest and brought the Safrihna Corn planting to a standstill. With reports of additional rain in the forecast for several areas of South America, investors did not hold back in taking bullish bets across the grain complex today. A big winner today was Wheat that finally broke through resistance. We have long been suggesting that cycle for Wheat was calling for it to rise but the supply narrative was like a ball and chain weighing down on its ability to rise. With Both Corn and Beans touch key resistance overhead, they are both poised for potential big upside moves in the coming days.
The US Dollar has been steadily rising all month long after being in correction mode through the month of January. Look for resistance to rest at about 102.00 to 102.50. Crude had held up well the past three days and has returned to the middle of its long-standing trading range.
