Chicago | Reuters — U.S. corn and wheat futures climbed four per cent on Tuesday amid a broad-based rally in commodities led by crude oil as the dollar slipped to a near-two-week low on weaker domestic economic data, traders said.
Chicago Board of Trade grain markets were overdue for a short-covering rebound after falling to multi-month lows on Monday, traders said.
CBOT soybeans also were strong, hitting a three-week high after sliding the past five days, on technical buying and USDA’s attache outlook for the Brazilian soybean crop to be shrinking due to drought.
“It’s more of a ‘risk-on’ environment in the commodities, thanks to the weaker dollar,” said Mike Zuzolo of Global Commodity Analytics.
The dollar fell after data on Tuesday showing new orders of U.S. factory goods fell sharply in December dented confidence the Federal Reserve will hike interest rates by June.
Corn saw its biggest move in a year, with March corn closing up 16 cents, or 4.3 per cent, at $3.85-3/4 a bushel (all figures US$). Commodity funds were featured net buying an estimated 25,000 contracts on Tuesday.
March wheat ended 21 cents up, or 4.3 per cent, at $5.13-3/4 while March soybeans closed 27-1/2 cents higher, up 2.9 per cent at $9.87, after nearly breaking through $10, hitting a high of $9.99.
Brent crude oil futures rose nearly six per cent, closing up $3.16 at $57.91 a barrel.
“When you have a slow, grinding low market, you will get these pops in volatility. I don’t have a great deal of confidence that we will be able to sustain it,” said Shawn McCambridge, a grains analyst with Jefferies Bache in Chicago.
But with wheat trading near four-month lows this week, exporters have seen a pick-up in demand. Egypt’s GASC on Tuesday bought 300,000 tonnes of Romanian and French wheat for shipment during first-half March.
Saudi Arabia purchased 690,000 tonnes of hard wheat via a tender on Monday. Iraq is seeking a minimum of 50,000 tonnes of wheat.
— Christine Stebbins is a Reuters correspondent covering U.S. grain and oilseed markets from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Nigel Hunt in London and Naveen Thukral in Singapore.