U.S. grains: Soybeans, wheat, corn rebound on technical buying

(Lisa Guenther photo)

Reuters — Chicago grain and soybean futures rose Thursday on technical buying, rebounding from losses in the previous session that were due to forecasts for favourable harvest weather in the week ahead.

Bargain-buying also buoyed soybeans after the previous session’s loss, while short-covering added to wheat’s advances.

Some investors may see grains as a safer trade currently than the volatile stock market, said Shawn McCambridge, analyst at Jefferies Bache.

The CBOE volatility index, the fear gauge of financial markets, hit its highest level since November 2011 and the S+P 500 and Nasdaq briefly fell into negative territory for the year as stocks were under pressure from concerns about the impact on the U.S. of weakening global demand and the possible spread of Ebola.

“I think we’ve seen a fair amount of money come into (grain) markets, most likely out of equities,” McCambridge said. “Enough to give us a counter-seasonal move, because the fundamentals really don’t support what we’ve done over the last several days.”

Chicago Board of Trade front-month corn futures gained 4-3/4 cents to $3.52-1/4 a bushel, having closed down 2.7 per cent on Wednesday (all figures US$).

The pullback in the previous session halted a rally that had taken corn to a six-week high, supported by concern over slow progress in a rain-affected U.S. harvest.

The U.S. Department of Agriculture said on Tuesday in its latest weekly crop report that the corn harvest was 24 per cent completed, compared with the five-year average of 43 per cent.

Front-month Chicago wheat climbed 11 cents to $5.17 a bushel, having closed down 0.6 per cent on Wednesday.

The dollar’s retreat from a recent four-year high added to U.S. wheat’s appeal in the world market.

Improving crop prospects in the southern U.S. Plains limited gains.

Front-month soybeans rose 14 cents to $9.66-1/2 a bushel, after losing ground on Wednesday when forecasts for drier Midwest weather put attention back on the prospect of a record U.S. crop reaching the market soon.

Export and processor demand, amid profitable crush margins in the United States and China, supported soybeans.

USDA said earlier this week that the soybean harvest was 40 per cent complete as of Sunday. This was well above market expectations but behind the five-year average of 53 per cent.

In another sign of ample supply ahead, farmers in Argentina are expected to plant from 20.6 million to 20.9 million hectares (50.9-51.6 million acres) with soybeans this year, up from 20.2 million hectares in the previous season, the Rosario grains exchange said on Wednesday.

But the absence of rain in the last two weeks threatened crop potential in Mato Grosso, Brazil’s top soybean-growing state, as producers struggled to plant on schedule.

— Rod Nickel is a Reuters correspondent based in Winnipeg. Additional reporting for Reuters by Gus Trompiz in Paris, Colin Packham in Sydney and Julie Ingwersen in Chicago.

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