Chicago Board of Trade wheat futures rose 1.6 per cent Thursday, their biggest daily gain in three and a half weeks as strong weekly U.S. export sales and technical factors inspired investors to cover short positions, traders said.
Corn followed wheat higher but gains were not as robust as the U.S. harvest got underway. Soybeans fell on chart-based selling and rains that could help some late-maturing crops.
At the CBOT, December wheat settled up 10-1/2 cents at $6.57 per bushel, after hitting a two-week high at $6.62-1/2. Gains accelerated as the contract broke through its 50-day moving average near $6.58 (all figures US$).
December corn ended up 3-1/4 cents at $4.59-1/2 per bushel and November soybeans fell 8-1/4 cents at $13.39-1/2 a bushel.
Wheat drew support from bullish export sales data. The U.S. Department of Agriculture reported sales of U.S. wheat in the latest week at just above 700,000 tonnes, topping trade expectations, and export shipments of 1.2 million tonnes, the biggest weekly tally in records dating to 1990.
"Chicago is underpinned with another really good week in export sales. The market is taking notice, and teaming that up with the quality problems we are hearing about in Russia and Kazakhstan, the Black Sea region," said Mike Zuzolo, president of Global Commodity Analytics in Atchison, Kansas.
Traders noted Brazil bought 120,400 tonnes of U.S. wheat in the last week. Brazil is not typically a major buyer of U.S. wheat but has turned to the United States and other suppliers following poor crop weather in South America.
"You've had three frost events in Brazil, so the South American crops are in question, and people are watching that," said Roy Huckabay with the Linn Group, a Chicago brokerage.
The Argentine government cut its estimate of the country's 2013-14 wheat area to 3.4 million hectares (8.4 million acres) on Thursday, from a previous forecast of 3.9 million hectares, citing dry planting conditions.
Wheat drew additional support from a drop in the value of the U.S. dollar since a surprise decision Wednesday by the U.S. Federal Reserve to maintain its stimulus. Wheat competes in a global market, and a weaker dollar makes U.S. supplies more attractive to those holding other currencies.
Additionally commodity funds hold a large net short position in CBOT wheat, leaving the market vulnerable to short-covering.
Corn followed wheat higher but gains were limited by the start of the harvest, with farmers poised to bring in the largest crop on record. The U.S. Department of Agriculture last week forecast the corn crop at 13.8 billion bushels. A weekly crop report showed the corn harvest was four per cent complete by Sunday.
Soybeans fell on long liquidation and expectations that rains in the U.S. Midwest this week could help late-maturing crops in a few areas.
"Around 20 to 25 per cent of the beans can still benefit from a rain," Huckabay said.
Technical selling played a role. The benchmark November contract fell to a 3-1/2-week low at $13.31-1/4 per bushel, filling a gap in the contract's chart that was established on Aug. 26.
Analysts expect that U.S. farmers will sell soybeans at harvest while storing corn in hopes of higher prices. Nearby CBOT soybean futures contracts are trading at a premium to deferred contracts, they note, while the opposite is true for corn.
"I would suspect the farmer would be more aggressive in selling beans off the combine as much as he can," said Mark Schultz, analyst with Northstar Commodity Investment Co. in Minneapolis.
-- Julie Ingwersen is a Reuters correspondent covering ag commodity markets in Chicago.