China has never canceled this many shipments of US wheat

The US Department of Agriculture in a Monday statement said private exporters exited purchases of 264,000 metric tons of US 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.