Corrected, Nov. 30 — Chicago | Reuters — Chicago wheat futures exploded to a five-month high on Friday due to threats to global production and as fund scrambled to cover their short positions in the post-holiday market, traders said.
The wheat rally gave support to Chicago corn futures, which hit a three-week high on the day, a day after the U.S. Thanksgiving Day holiday. Soybean futures fell on growing U.S.-China tensions.
Wheat futures rose on a mix of technical and emerging bullish fundamentals, including rising cash values for U.S. and Russian supplies, wet weather in Europe and Australia, and fears of a decline in U.S. acreage, traders said.
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U.S. wheat futures closed higher on Thursday on concerns over the limited availability of supplies for export in Russia, analysts said.
But traders said it was the funds scrambling to cover their positions that mostly fuelled the rally, amid news that there were no deliveries against the CBOT December wheat contract on first notice day on Friday.
“In these low-liquidity markets, when you have a bigger fish jumping into a smaller pond, they can really make a huge splash,” said Daniel Hussey, senior market strategist at Zaner Group.
Adding to that support was the U.S. Department of Agriculture weekly wheat export sales data on Friday, which showed sales were slightly above analysts’ expectations, said Jason Roose, analyst for U.S. Commodities.
The most active Chicago wheat futures contract ended the day up 2.9 per cent, closing at $5.41-3/4 a bushel (all figures US$).
Corn futures also were bolstered by heavy snowfall forecasts in the northwest U.S. corn belt in the coming days, and farmers expected to face very slow progress in harvesting an estimated eight million remaining acres of crop.
The most active CBOT corn contract settled the day up 2.08 per cent at $3.81-1/4 a bushel.
Meanwhile, Chicago soybean futures slumped to an 11-week low on Friday with the market closely watching for updates on U.S.-China trade talks, and traders less than impressed with a jump in recent soybean export sales between the two countries.
Concerns over U.S.-China trade tensions resurfaced after China rebuked U.S. President Donald Trump’s decision to ratify a bill backing protesters in Hong Kong. China said on Thursday it would take “firm countermeasures” if the U.S. continues to interfere in Hong Kong.
That quelled any market buzz from USDA’s weekly export sales, which reported the biggest volume of soybean exports sold to China in three weeks.
The most active CBOT soybean contract settled down 0.62 per cent at $8.76-3/4 a bushel.
— P.J. Huffstutter reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore.
CORRECTION, Nov. 30: The headline and lead paragraph in a previous version of this article incorrectly described CBOT March 2020 wheat as having hit a six-month high.
