U.S. grains: CBOT wheat surges 2.9 per cent, corn follows

Chicago | Reuters –– U.S. wheat futures rallied 2.9 per cent to their highest level in more than four months on Tuesday, supported by concerns that political unrest in Ukraine will disrupt exports and worries about dry soils limiting U.S. production, traders said.

Some technical buying — the benchmark Chicago Board of Trade May contract broke above its 200-day moving average for the first time since February 2013 — also contributed to the strength in wheat.

“It was kind of a contribution from a lot of different things,” said Shawn McCambridge, grains analyst at Jefferies Bache. “The market kind of fed upon itself.”

Corn futures jumped 1.1 per cent on spillover strength from wheat’s gains. Traders also noted bargain buying following Monday’s steep decline.

Soybean futures were mixed, with the nearby contract sagging as investors exited long positions they had built up as the market rallied to a six-month high last week. But new-crop contracts gained in a last-minute bid to entice U.S. farmers to devote additional acreage to soy as they finalize planting decisions.

Chicago Board of Trade May soft red winter wheat settled up 18-1/4 cents at $6.59 a bushel (all figures US$). The front-month contract peaked at $6.71-3/4, its highest price since Nov. 1.

Worries about winter wheat development in key growing areas of the U.S. persist as the crop begins to break dormancy.

“The U.S. Plains are the area of concern as dryness has persisted,” Sterling Smith, Citigroup market strategist, said in a note to clients. “Recent precipitation in Texas has been beneficial, but the main production area from Oklahoma north through Kansas remains very short of soil moisture.”

USDA’s weekly state crop reports issued late on Monday showed wheat condition ratings improved in Kansas and Texas but declined in Oklahoma.

CBOT May corn was up five cents at $4.83-1/4 a bushel, also breaking through resistance at its 200-day moving average.

CBOT May soybeans were down 5-3/4 cents at $14.13 a bushel while the new-crop November soybean contract was 13 cents higher at $11.89-1/2 a bushel.

“Beans still have plenty of issues to sort out after yesterday’s report, needing to shut off old-crop export demand but also spur 2014 plantings,” said Matt Zeller, director of market information at INTL FCStone.

Further support for wheat stemmed from lingering concerns that political turmoil in Ukraine could disrupt shipments from the Black Sea region.

“The market’s attention is again moving back to the critical political situation in Ukraine,” one European trader said. “It is immensely difficult to forecast which way the political events in Ukraine will move and any heightening of tension could result in very volatile price movements if the market sees a threat to Black Sea grain exports.”

— Mark Weinraub is a Reuters correspondent covering grain futures markets from Chicago. Additional reporting for Reuters by Michael Hogan in Hamburg and Nigel Hunt in London.

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