By Michael Hirtzer and Tarso Veloso

China canceled another batch of U.S. wheat export shipments yesterday, adding to an already record number of cancellations that have weighed on Chicago futures.

The U.S. Department of Agriculture in a Monday statement said private exporters exited purchases of 264,000 metric tons of U.S. soft red winter wheat to China. It was the third straight session with such an announcement, bringing the cancellation total to 504,000 tons, the most in USDA data going back to 1999. 

Wheat futures fell as much as 2.7% to $5.235 a bushel after the announcement, the lowest intraday level since August 2020, before prices turned higher.

“Those cancellations show that China can get wheat cheaper from others,” said Ben Buckner, chief grains analyst for AgResource Co. 

Still, wheat futures recovered by late morning. Abundant world crop supplies have been pressuring prices for months, but because money managers already had such sizable bearish positions, the market has been struggling to stay down as traders cover their short bets.

While wheat’s strength is unexpected given another cancellation by China, “we’re about to trigger a major round of short covering,” Dennis Smith, broker at Archer Financial Services Inc. in Chicago, said in a note.

Related:USDA exports – Mexico buys corn, unknown buys soybeans, April 19, 2024

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Note: The U.S. Department of Agriculture is required by law to publicly release summary sales data obtained from U.S. exporters of many agricultural commodities. Stay up to date on announcements from private exporters from Farm Futures.