U.S. grains: Corn jumps in short-covering bounce

(Dave Clark photo courtesy ARS/USDA)

Chicago | Reuters — U.S. corn futures climbed more than one per cent on Wednesday on short-covering and technical buying after recent contract lows and on expectations that a weaker U.S. dollar may revive slumping export demand.

Wheat also rose about one per cent after hitting one-month lows in the previous session, while soybeans recovered late in the session to close slightly higher.

“This is textbook short-covering from the funds at a time of year when they aren’t really used to being very short corn,” said Ted Seifried, analyst with Zaner Ag Hedge.

Corn fell in the wake of a bearish U.S. Department of Agriculture crop report on Friday that showed massive stocks and a bigger-than-expected U.S. harvest. But failure to extend those losses since then prompted speculation that a near-term low had been achieved.

Chicago Board of Trade March corn jumped 4-3/4 cents, or 1.4 per cent, to $3.53 a bushel (all figures US$). After more than a month of mostly range-bound trade, the contract notched its largest percentage gain since mid-November.

Still, March corn faced chart resistance at its 50-day moving average, a technical level it has largely failed to breach since late October.

Funds were net buyers of about 17,000 corn contracts on Wednesday, trade sources estimated.

Concerns about adverse South American crop weather underpinned corn.

Drought may reduce Argentina’s crop production by up to 3.7 million tonnes, according to analysts. Meanwhile, wet weather in parts of Brazil could stall its soybean harvest and delay planting of the country’s large second crop of corn.

Grains also drew support from a recent weakening of the dollar, which makes dollar-denominated commodity exports more affordable for those holding other currencies. The dollar index stabilized on Wednesday after sinking to a three-year low on Monday.

CBOT March soft red winter wheat gained four cents, or one per cent, to $4.20-1/2 a bushel, rebounding after three sessions of declines. March soybeans fell 1-1/2 cents to $9.66-1/2 a bushel, the first lower day in three.

Funds were net buyers of 4,500 wheat contracts and 2,000 soybean contracts, trade sources estimated.

— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago; additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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