U.S. grains: Wheat climbs on short-covering, export optimism

CBOT December 2018 wheat, with 100-day moving average. (Barchart)

Chicago | Reuters — U.S. wheat futures jumped more than three per cent on Monday on fund-driven short-covering coupled with expectations of a pick-up in export business, analysts said.

Corn futures followed wheat higher while soybeans declined on forecasts for rising U.S. soy inventories.

Chicago Board of Trade December (CBOT) soft red winter wheat futures settled up 17-3/4 cents at $5.19-3/4 per bushel after reaching $5.20-3/4, the contract’s highest since Oct. 17 (all figures US$).

CBOT December corn settled up 1-1/2 cents at $3.71-1/4 a bushel while January soybeans fell 3-1/2 cents at $8.83-1/4 a bushel.

Wheat futures rallied after the December contract on Friday neared psychological support at $5 a bushel.

“Wheat garnered support after prices fell to areas that uncovered value buying in the past, with Chicago seeing double-digit gains on fund buying as we approach first notice day,” INTL FCStone chief commodities economist Arlan Suderman said in a client note.

CBOT December wheat also gained against back months on expectations that maximum storage costs for deliverable CBOT wheat would decline next month, Suderman said.

The CME Group, parent of the CBOT, adjusts wheat storage rates based on the average price spread between the front two futures contracts during a roughly two-month observation period, which ends next week.

Others cited poor weather in Argentina, where the wheat crop is developing, and optimism about export demand for U.S. wheat.

“Wheat is rebounding as we expect strong demand for U.S. supplies in the first half of next year as the Black Sea region and Australia will have less to sell,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

Soybean futures declined as traders digested the U.S. Department of Agriculture’s Nov. 8 forecast for U.S. soybean stocks to rise to 955 million bushels by the end of the 2018-19 marketing year following a record-large harvest and as a trade fight with China limits exports.

“We had a pretty bearish (USDA) report on Thursday. There is not much bullish news out there in soybeans right now,” said Terry Reilly, senior analyst with Futures International.

U.S. President Donald Trump is due to meet with China’s President Xi Jinping in Buenos Aires at the end of November on the sidelines of a Group of 20 summit to discuss a possible way out of their deepening trade war.

Soybean futures also lost ground relative to soymeal and soyoil futures, a reversal of last week’s trend in which both soy products fell versus soybeans.

USDA’s weekly export inspections and crop progress reports were delayed until Tuesday due to Monday’s observance of Veterans Day.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.


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