U.S. wheat futures rose 1.3 per cent on Tuesday, their second straight day of gains, d ue to concerns about the poor condition of the just-planted winter crop in the United States and weather trouble in major exporters Australia and Argentina.
Soybean futures also rose, bouncing back from two down days that saw prices fall 3.6 per cent. Soybeans have tumbled more than 1 5 per cent f rom the record they hit in early September, but found support near $15 a bushel.
Corn markets also were firm, supported by the strong gains in soybeans and wheat.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
Traders were expecting an increase in demand for U.S. wheat amid production problems in Australia and Argentina, and tightening supplies in Black Sea countries such as Ukraine. U.S. wheat export prices were becoming more competitive as well, the traders said.
"I have noticed that recently the U.S. has been a little bit uncompetitive in the market against other suppliers but that gap has narrowed and there is an expectation for increased demand for U.S. wheat," Greg Grow, director of agribusiness at brokerage Archer Financial Services.
Chicago Board of Trade December soft red winter wheat settled up 1 1 cents at $8.77 a bushel, its highest close in nearly two weeks. Wheat br oke through resistance at its 50-day moving average late in the day and closed above that key technical point for the first time since Oct. 24.
"Wheat conditions are still in the backdrop," said Joe Davis, vice-president of commodity sales at Futures International LLC. "With no rain in the forecast, they are kind of leading the whole complex higher. With the dryness in the Great Plains, I would expect to see further deterioration."
Soybeans
CBOT January soybeans were 1 2-1 /4 cents higher at $15.15 -1/2 a bushel and CBOT December corn was up 5 cents at $7.43 a bushel.
"Soybeans had been oversold so there is some bargain buying," said Sterling Smith, futures specialist with Citigroup. "The $15 area has definitely proven to be a solid line in the sand, they don’t want it below that level."
The $15-a-bushel level represented a 62 per cent Fibonacci retracement of the summer rally that pushed soybeans to an all-time high of $17.94-3/4 a bushel.
A weak dollar and firm crude oil market also added to the bullish tone in the grains market and encouraged investors to boost the amount of risky assets they were holding in their portfolios.
Despite the gains, prices for all three commodities were expected to stay inside recent trading ranges due to uncertainty over the outcome of Tuesday’s U.S. presidential election and a monthly U.S. Agriculture Department supply and demand report on Friday.
Weekly U.S. crop ratings showed a record low for winter wheat at this point of the season, as dryness continued to hamper key growing states. Adverse weather also continued to raise uncertainty about wheat harvests in Argentina and Australia.
U.S. wheat ratings fell to 39 per cent good to excellent from 40 per cent in the previous week a s the health of the crop deteriorated due to dry conditions in the southern U.S. Plains, weekly USDA data released on Monday showed.
This was the lowest-ever wheat rating for early November, although it was in line with analysts’ expectations. Dry weather remains a problem in a large swath of hard red winter wheat country in the western U.S. Plains, said Don K eeney, meteorologist for MDA EarthSat Weather. "It’s very dry and the crop conditions declined. It doesn’t look like they’ll get any rain in about the western two-thirds of the belt," he said.
Showers were forecast for the eastern third of the Plains by the weekend but the west, which needs the rain the most, will stay dry, Keeney said.
The wheat market has been worried in recent weeks about weather-affected growing seasons in South America and Australia, where wheat harvesting is now in progress.
Australia is bracing for rains this week in its eastern grain belt, which could hit quality with the harvest in full swing.
Analysts expect the USDA to raise its soybean production estimate in its monthly crop report, reflecting late rain that allowed a partial recovery in yields after severe summer drought, although this additional supply would be absorbed by strong demand for the oilseed.
In corn, the USDA’s harvest estimate was expected to stabilize after falling sharply during the past four months due to the drought in the U.S. Midwest.
Mark Weinraub reports for Reuters in Chicago
