U.S. grains: Corn, wheat rally on technical support

U.S. corn and wheat futures rose on Tuesday, with wheat gaining the most in more than a month, supported by bargain seekers and technical buying, traders said.

Soybean futures fell for the third time in four sessions, pressured by concerns about a slackening of export sales.

Traders said investors were stepping back from the bullish soybeans and bearish corn positions they have built up during the harvest of the U.S. corn crop, a record.

“It seems like the trade is buying corn and selling beans against it,” said Garret Toay, risk management consultant at Toay Commodities Futures Group. “The focus is starting to shift to South America. With weather being benign down there, you are seeing a bit of a unwind of that (long soy/short corn) trade.”

Chicago Board of Trade corn for December delivery settled up 5-3/4 cents at $4.17-3/4 a bushel (all figures US$). Prices bottomed out at $4.10-3/4, their lowest since Aug. 26, 2010, during overnight trading before turning higher.

CBOT January soybean futures ended down 11-1/4 cents at $12.76-1/4 a bushel. During Tuesday’s session, prices fell below key support at their 200-day moving average for the first time since Nov. 8 but closed above that technical point.

The U.S. Agriculture Department said on Tuesday morning that private exporters reported the sale of 240,000 tonnes of U.S. soybeans to China but that delivery was not scheduled until next marketing year.

“When China announced they were booking new crop beans, the first thing that came to mind was it was probably a bearish indicator for old-crop contracts,” said Terry Reilly, senior market analyst for Futures International. “China may be slowing down on old-crop commitments and focusing on new crop, at least from the United States. Basically they are shifting business back to South America.”

A dry spell in Argentina should allow soy planting to progress rapidly in the next week now that the ground is sufficiently moist, a local meteorologist said.

Winter and the first days of spring were dry in Argentina, but abundant rains fell on the main crop areas in October. Soy farmers now need time to work the soil.

CBOT December wheat gained eight cents to $6.50-1/4 a bushel. The 1.3 per cent gain for the front-month contract was its biggest since a rise of 1.2 per cent on Oct. 18.

“Wheat has fallen into support near the summer lows and should get further support from firmer overseas values,” Sterling Smith, futures specialist at Citigroup, said in a note to clients.

Egypt’s GASC on Tuesday bought 120,000 tonnes of Russian wheat for shipment in December, the second deal for the world’s largest importer of wheat in the past week.

Concerns about the U.S. crop as it heads into dormancy added support for wheat prices.

USDA said Monday afternoon that the winter wheat crop was rated 63 per cent good to excellent, down two percentage points from a week earlier. The crop was in much better shape than a year ago, when USDA ratings were just 34 per cent good to excellent.

— Mark Weinraub is a Reuters correspondent covering grain futures markets in Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago.


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