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Ukraine ban stokes wheat futures

10/24/2012 @ 3:28pm

U.S. wheat futures jumped Wednesday after Ukraine said it would ban exports of its dwindling wheat supplies.

Chicago Board of Trade December wheat futures settled up 15 1/4 cents or 1.8% at $8.84 a bushel. KCBT December wheat rose 13 1/2 cents or 1.5% to $9.21 1/4 a bushel. MGEX December wheat rose 10 cents or 1.1% to $9.55 a bushel.

Ukraine's agriculture ministry said Wednesday that a ban on the export of wheat will come into effect from Nov. 15 because of concern that stocks are running low on the domestic market due to a poor harvest. The Ukrainian government has agreed with the country's wheat exporters that no more than five million tons of wheat can be exported in the current marketing year, with shipments now expected to breach that mark by Nov. 15.

CBOT December wheat traded as high as $8.95 a bushel--the highest level since Oct. 1--in the first few minutes of the open-outcry session. But the high prices led market participants to take profits by selling futures, causing prices to ease.

"We ran it up in two minutes and then came right off of it," said Tom Leffler, head of Leffler Commodities, a Kansas brokerage.

Traders also said the Ukraine export ban had been expected. The country last week said it might run out of exportable wheat supplies in mid-November.

The current pace of U.S. wheat exports wouldn't be enough to meet the federal government's projection for exports over the whole current marketing year. Dwindling supplies in the Black Sea area have raised hopes for an uptick in U.S. wheat exports in coming weeks. Traders warn that if that uptick doesn't come, prices could ease.

Soybean futures rose Wednesday on signs of strong export demand at a time of tight supplies. The USDA on Wednesday said private exporters reported export sales of 105,000 metric tons of soybeans to unknown buyers for delivery this marketing year. Strong U.S. cash markets also supported soybean futures.

CBOT November soybeans settled up 17 1/4 cents, or 1.1%, at $15.70 1/2 a bushel.

Corn futures settled mixed. The gains in wheat pulled corn higher early in the day, but futures then receded as the higher prices attracted selling. Corn traders are stuck waiting for more information to determine whether supply and demand are already balanced at current price levels, since severe drought shrank the size of the U.S. corn harvest but high prices have curbed demand from foreign buyers, ethanol producers and livestock farmers.

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