U.S. grains: Wheat jumps on short-covering

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. wheat futures rose more than two per cent on Wednesday as signs of fresh export demand triggered a short-covering rally in a market where commodity funds hold a large net short position, traders said.

Corn futures ended lower after a choppy session while soybeans fell, pressured by the expanding harvest of a likely record-large U.S. crop.

At the Chicago Board of Trade, December wheat settled up 9-1/2 cents at $4.05 per bushel (all figures US$). December corn ended down 1/2 cent at $3.47-3/4 a bushel and November soybeans fell 6-3/4 cents at $9.56-3/4 a bushel.

Wheat rose on news that Morocco’s grain agency bought 260,000 tonnes of U.S. wheat.

“I think the Moroccan business helped a little bit,” said Tom Fritz, partner with EFG Group in Chicago. “Now the shorts are falling all over themselves to get out, just based on the price action,” Fritz said.

The U.S. Commodity Futures Trading Commission’s latest commitments report showed that as of Sept. 27, non-commercial traders held the fourth-largest net short position in records dating to 2006. That big net short left the wheat market vulnerable to short-covering rallies.

CBOT wheat and K.C. hard red winter wheat gained against Minneapolis Grain Exchange spring wheat futures as traders took profits on long Minneapolis/short Chicago and K.C. wheat spreads. MGEX spring wheat has been rising since late September on worries about tight supplies of top-quality milling wheat.

The bounce in CBOT wheat helped underpin corn futures.

But soybean futures fell on harvest pressure and expectations for a record-large crop. Informa Economics, a private analytics firm, forecast U.S. 2016 soybean production at 4.3 billion bushels with a yield of 51.6 bushels per acre, trade sources said.

Earlier this week, commodity brokerage INTL FCStone raised its soy yield estimate to a record 52.5 bu./ac.

Both firms’ yield figures were above the U.S. Department of Agriculture’s last official forecast of 50.6 bu./ac., signalling a possible increase when the government updates its figures on Oct. 12.

“Rising yield estimates and increasingly bearish chart signals continue to weigh on the oilseed,” INTL FCStone chief commodities economist Arlan Suderman wrote in a note to clients.

Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Gus Trompiz in Paris.

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