U.S. grains: Soy, corn follow broad commodities strength higher

Ripe soybeans near Morden, Man. on Sept. 14, 2017. (Allan Dawson photo)

Chicago | Reuters — U.S. soybean futures rose Friday and corn futures hit a three-week high, following broad strength in commodities at the start of the month and a softer U.S. dollar, analysts said.

The 19-market Thomson Reuters CoreCommodity Index rose 0.8 per cent, snapping a four-session slide.

Chicago Board of Trade January soybeans settled up 8-1/2 cents at $9.94-1/4 per bushel and March corn ended up three cents at $3.58-3/4 a bushel after reaching $3.59-1/2, its highest since Nov. 9 (all figures US$).

Wheat followed the firm trend, buoyed by fund short-covering and fears that storms could damage mature wheat in easterly Australia.

CBOT March wheat rose 5-1/2 cents at $4.38-1/2 but stayed within Thursday’s trading range.

Grains got a boost as the dollar index sagged. U.S. stocks, the dollar and Treasury yields sank after an ABC report said former national security advisor Michael Flynn was prepared to testify that Donald Trump instructed him to make contact with Russians during the presidential campaign.

A weaker dollar tends to make U.S. grains more attractive to those holding other currencies.

“The commodity sector has fared well overall through this morning’s drama on Wall Street, with new money coming into the sector as we turn the calendar,” INTL FCStone chief commodities economist Arlan Suderman said in a note to clients.

“Soybeans are the most attractive for fund managers, due to the volatility that they generally present when adverse weather hits,” Suderman said.

Parts of Argentina’s soy and corn belt received beneficial rains this week but dryness remains a concern across several provinces. Conditions are generally favourable in Brazil, the world’s biggest soy exporter, MDA Weather Services said in a note to clients.

Commodity funds hold large net short positions in both corn and wheat, leaving those markets prone to bouts of short-covering.

“You could see some money rotation ahead of the year’s end. You could get a rotation out of equities… that would mean short-covering in corn and wheat,” said Joe Vaclavik, president of Chicago-based Standard Grain.

Wheat found support this week from the prospect of a fall in U.S. wheat area.

Meanwhile, in eastern Australia, heavy rains forecast to intensify over the weekend are threatening to wipe out or damage up to four million tonnes of wheat due to be harvested soon, with many grain storage sites forced to close.

— Julie Ingwersen is a commodities correspondent for Reuters in Chicago.

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