U.S. grains: Corn, soybeans jump two per cent on demand, fund buying

(Lisa Guenther photo)

Chicago | Reuters — U.S. corn and soybeans surged more than two per cent on Monday, with each futures contract reversing from early losses on a short-covering rally tied to a slow harvest and strong demand for fresh supplies.

The higher prices came despite favorable weather conditions for harvest in the U.S., where farmers were gathering record-large corn and soy crops. Soymeal futures soared nearly eight per cent for their largest daily gains in four years.

A slow start to the harvest season had some soybean processors scrambling for beans to cover their short positions while rail brokers pulled offers for the animal feed, traders said.

“Meal is leading the way — crushers are having problems with their hedges,” said Dan Anderson, broker at ED+F Man Capital in Chicago.

After the close of trading, the U.S. Agriculture Department said the soybean harvest was 70 per cent complete, within analyst expectations but below the five-year average pace of 76 per cent.

The corn harvest was only 46 per cent done, below the average pace of 65 per cent, USDA said.

“We still have a lot of corn to harvest. We have some harvest pressure moving down the pipe; we’re just not seeing it today,” Anderson added.

Chicago Board of Trade corn futures for December delivery settled 10 cents higher at $3.63 per bushel, just below their two-month high of $3.65 reached on Friday (all figures US$).

CBOT November soybeans gained 28-1/2 cents to $10.06; December soymeal was up $26.60 to $376.80, the highest level since Sept. 12.

CBOT December wheat climbed five cents to $5.22-3/4, rebounding from an earlier one-week low.

Regulatory data released on Friday showed speculative investors, including hedge funds, extended their long, or bullish, bet on corn futures and decreased their short, or bearish, bets on soybeans and wheat.

“Fundamentally we have a lot of grains and oilseeds around the world. We are just about halfway through the U.S. harvest and we really do know what yields look like for corn and soybeans,” said Graydon Chong, Rabobank senior grains analyst.

Last week, U.S. soybeans rose to their highest since mid-September, corn hit its highest since Aug. 22 and wheat touched its highest since early September.

Rain delays in the U.S. harvest, dryness in Brazilian soybean-growing belts and bargain-buying have helped corn and soybeans recover some ground since they hit five- and 4-1/2-year lows respectively at the start of the month.

Worries about Brazilian soybean crops were eased by scattered rains that fell in the country’s centre-west and southeast agricultural areas on Friday and by forecasts for heavier storms this week.

— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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