Chicago | Reuters — U.S. wheat surged more than two per cent to the highest level in a month on Monday as forecasts for rains in the U.S. Plains revived concerns about crop damage and encouraged buying among investors with large short positions.
Worries that frost and cold temperatures could reduce yields in the northern portion of the Plains also bolstered prices for wheat, which have gained eight per cent in less than a week.
Corn futures also rose at the Chicago Board of Trade, following gains in wheat and on fears that frost in North Dakota could harm emerging plants there.
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U.S. grains: Corn rebounds from contract lows on short covering, bargain buying
Bargain buying and short covering lifted U.S. corn futures on Monday after the market slid to contract lows on expectations for strong U.S. output, traders said.
Soybeans edged higher on technical buying, following news that China would again import a record 77 million tonnes of soybeans during the coming October-to-September shipping season, according to an official think tank.
“We are probably trading headlines today — forecasts for heavy rains in Texas and Oklahoma,” said Austin Damiani, analyst at Frontier Futures. “People are worried that with these (rain) totals, we will have a loss of production.”
A reversal from what had been deep drought in the Plains to a wetter weather pattern comes ahead of the wheat harvest, when excessive moisture can result in crop disease for maturing plants.
Rains could arrive midweek in Texas and Oklahoma, possibly causing local flooding and reducing wheat quality, with extended outlooks for next week remaining “unfavourably wet,” the Commodity Weather Group said in a note to clients.
CBOT July wheat finished 10-3/4 cents, or 2.2 per cent, higher at $5.21-3/4 per bushel (all figures US$). K.C. July wheat was up 13-1/4 cents to $5.55.
“We have news of Russia cutting taxes and (wheat) has still been able to hold on to gains which tells us that the market has found a bit of bottom here,” Paul Deane, senior agricultural economist at ANZ Bank, said.
Russia lifted the duty on wheat exports on Friday to help domestic producers. The government said the move would boost overseas sales by one million tonnes.
Non-commercial traders hold net short positions in wheat, corn and to a lesser extent soybeans, which analysts say leaves the markets prone to bouts of short-covering despite ample global supply.
CBOT July corn settled up 2-1/2 cents at $3.68 per bushel, just below the three-week high reached on Friday. July soybeans rose 1-1/4 cents, or 0.1 per cent, to $9.54-1/2.
— Michael Hirtzer reports on grain markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.
