U.S. grains: Wheat surges on short covering

Chicago | Reuters — U.S. grain and soybean futures firmed on Friday on technical buying and short-covering as investors squared positions before a key government crop report due to be released on Tuesday.

Stabilizing global equities markets following steep losses to start the year offered underlying support to grains.

Wheat futures notched the strongest gains after hitting contract lows earlier in the week and as speculative traders have built a sizeable net short position in the market.

Chicago Board of Trade March wheat ended up 10 cents, or 2.1 per cent, at a 2-1/2-week high of $4.78-1/2 a bushel (all figures US$). For the week, the contract gained 1.8 per cent, its fourth straight weekly rise.

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CBOT March corn gained four cents to close at $3.57 a bushel, up 1.1 per cent on the day but down 0.5 per cent on the week, the contract’s fifth straight weekly loss.

March soybeans added 3/4 cent to settle at $8.65-1/4 a bushel, up a penny for the week. It was, however, the first weekly increase for soybeans in three weeks.

“The fact that we got a little reprieve (in outside markets) enabled the grains to see a light amount of short-covering,” said Brian Hoops, president of brokerage and commodity marketing advisory service Midwest Market Solutions.

“The corn and wheat markets hit contract lows this week,” he said, “and people don’t want to continue to push them sharply lower ahead of the USDA report on Tuesday.”

The U.S. Department of Agriculture reports are expected to show ample grain supplies, including the highest Dec. 1 U.S. corn stocks on record, and the lowest U.S. winter wheat seedings since 2009.

Dealers said the slow pace of U.S. grain exports amid increased competition from Argentina was helping to keep prices in the cash market on the defensive.

“The U.S. releases winter planting details next week, which along with the record fund short in U.S. wheat may allow U.S. markets to pause for breath,” David Sheppard, managing director of U.K. merchant Gleadell, said in a market note.

The Commodity Futures Trading Commission is due to release its weekly report on commitments of traders after Friday’s close.

Analysts said the report could show an increase in the net short position by funds through the close of trading Tuesday. Next Friday’s report will reflect the fund short-covering in the second half of this week.

Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London.

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