U.S. corn futures rose nearly two per cent on Monday, their biggest daily gain since August, as commodity funds covered short positions after the U.S. Department of Agriculture last week forecast domestic corn stocks below trade expectations.
“The report wasn’t as bearish as everyone was thinking, so I think you’ve got some technical short-covering in here,” said Tom Fritz, a partner at EFG Group in Chicago.
USDA last week projected U.S. corn ending stocks for 2013-14 at 1.887 billion bushels, up sharply from 2012-13 but below an average of trade estimates for 2.029 billion.
At the Chicago Board of Trade, soybeans turned higher, following corn in light volume, while wheat turned down on technical selling and poor export demand.
CBOT December corn settled up eight cents at $4.34-3/4 per bushel, after reaching $4.37-1/4, its highest point since Oct. 28 (all figures US$).
With U.S. farmers harvesting their biggest-ever corn crop, commodity funds have established a near-record net short position in CBOT corn, leaving the market vulnerable to bouts of short-covering.
“Some of the funds are moving to the sidelines. It doesn’t mean they are not bearish on corn,” said Dan Cekander, analyst with Newedge USA in Chicago, “but they are going to pick their spots to sell it, and it might not be right away.”
Light commercial buying added support on Monday as end-users sought to cover their needs as the U.S. harvest wound down.
“You are getting down to the last 15 to 20 per cent of harvest, and from how it looks, that is going to go slow,” said Shawn McCambridge, analyst with Jefferies Bache in Chicago.
Farmers have been reluctant to sell much of the 2013 corn harvest due to the steep drop in prices since mid-summer, a factor that has kept cash bids at historically high levels in parts of the Midwest.
USDA said the corn harvest was 73 per cent complete and soybeans were 86 per cent finished by Nov. 3. The next weekly crop progress report was scheduled for release on Tuesday, a day later than normal, due to the federal Veterans Day holiday on Monday.
Soybeans turn higher
CBOT soybeans rallied from early declines on technical buying and spillover strength from corn.
Most-active January soybeans hit a two-week high at $13.04-3/4 per bushel but pared gains in final minutes after falling short of the 50-day moving average of $13.05-1/2.
The contract settled at $13.01, up five cents on the day.
Trading volume in soybeans near 162,000 contracts was down about 20 per cent from the 250-day average.
Gains in soy were limited by profit-taking after front-month soybeans gained 3.2 per cent last week. Traders also appeared to be liquidating long soybean/short corn spreads.
Beans had firmed on Friday after USDA put global ending stocks of soybeans at 70.23 million tonnes, more than two million tonnes below the average of trade forecasts.
Wheat turns lower; extends slide
CBOT wheat closed lower for a sixth straight session, erasing early gains tied to strength in corn. Technical selling and sluggish export demand hung over the market.
CBOT December wheat settled down 3-1/2 cents at $6.46-1/4 per bushel but held above Friday’s seven-week low.
“For wheat, there is concern about the pace of demand. We got the season off to a good start but now we are starting to see weekly inspections and sales declining, and tenders being filled overseas,” said McCambridge.
Also, USDA on Friday raised its forecasts of U.S. and world wheat ending stocks.
“We are just not short wheat on the world market,” McCambridge said.
— Julie Ingwersen is a Reuters correspondent covering ag commodity markets in Chicago. Additional reporting for Reuters by Colin Packham in Sydney and Agnieszka Flak in Milan.