U.S. grains: Corn hits four-month top on short-covering

(Dave Clark photo courtesy ARS/USDA)

Chicago | Reuters — U.S. corn futures hit a four-month high on Friday as concern about summer weather risk in the Midwest and dry conditions in Brazil prompted investors to cover short positions, analysts said.

Soybean futures also rose, but stayed below multi-month peaks set this week, while wheat ended flat.

At the Chicago Board of Trade, May corn settled up 4-1/2 cents at $3.78-1/2 per bushel after reaching $3.80-1/2, the highest spot corn price since Dec. 14.

CBOT May soybeans ended up 8 cents at $9.56 a bushel. May wheat settled unchanged at $4.59-3/4.

Corn firmed as the market added risk premium ahead of the U.S. growing season. The U.S. Climate Prediction Center this week forecast an increasing chance of the weather phenomenon La Nina in the second half of the year. Its arrival could raise the risk of hotter and drier weather in the Corn Belt.

“That has given us a big push this week, as far as short covering, in case that would hurt yields this summer,” said Brian Hoops, president of brokerage and commodity marketing advisory service Midwest Market Solutions.

Meanwhile, Brazil’s winter corn crop is being stressed by dry conditions. The Commodity Weather Group said in a note to clients that “minimal rains over the next 10 days allow stress to expand to nearly half of the belt.”

The U.S. Department of Agriculture said private exporters sold 344,200 tonnes of U.S. corn to unknown destinations for 2015-16 delivery.

Some U.S. traders wondered whether the corn might be headed to Brazil, where supplies are already tight after the country exported a record 35 million tonnes from July through March.

Soybean futures advanced on fund-driven buying and a supportive monthly U.S. crush report from the National Oilseed Processors Association.

NOPA said its members crushed 156.69 million bushels of soybeans in March, the second-biggest March on record. The figure was up from 146.181 million crushed in February and just above an average of trade estimates.

Front-month soybean futures ended up 4.3 per cent for the week, their biggest weekly rise since July. Corn finished up 4.3 per cent, its biggest advance since December.

Traders say this week’s advances in soybeans and corn have been fueled in part by hedge funds and other investors plowing money into the sector, despite ample global supplies of crops.

Wheat ended steady after a choppy session. Widespread rains were forecast for the U.S. Plains wheat belt this weekend, bringing moisture to relieve dry conditions that have been building in some areas.

Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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